Out of money, Wavefront shuts down

Wavefront

Vancouver-based business incubator Wavefront has shut down, BetaKit has learned.

According to those familiar with the matter, the incubator and accelerator, which focused on supporting mobile and IoT technology companies, halted operations on Friday.

The halting of operations has also affected the organization’s Toronto office. Those familiar with the situation indicated that doors to the location have been locked, with Wavefront’s sign taken down. “It’s totally dark,” one source told BetaKit.

The shutdown has also led to the termination of multiple Wavefront staff, although BetaKit has yet to confirm the total number (Wavefront lists a total of 32 different staff members on the organization’s website).

In 2014, Wavefront was allocated up to $9.5 million in CAIP funding over the next five years.

According to one communiqué from a now-former Wavefront employee obtained by BetaKit, the shutdown will affect not only tenants in Wavefront’s spaces, but halt ongoing programming, such as its RevUP and Venture Acceleration Program. According to this message, payments for these programs would have been processed May 1st.

In general, there seems to be confusion about next steps, with former employees working to find associated startups detailed information, alternate local partners to help continue or wind down programming, and building access for tenants to grab business and personal effects. As of Wednesday, May 17th, some startups were still in the process of securing their belongings.

In 2014, Wavefront was one of four BC-based incubators and accelerators to receive government support through the Canada Accelerator and Incubator Program (CAIP). As part of the program, Wavefront was to receive up to $9.5 million over the next five years, with a requirement to demonstrate “matching contributions on at least a 1:1 basis during the period of the contribution funding.” The initiative was part of $100 million committed by the Government of Canada over 2013 and 2014 as part of its Economic Action Plan. Wavefront had also received $19.6 million in NCE funding starting in 2011 through to 2021.

The Wavefront website lists multiple government organizations as partners on its website, including the National Research Council Canada (IRAP funding), Global Affairs Canada, and Western Economic Diversification Canada, as well as the governments of British Columbia and Canada.

BetaKit has reached out to multiple people in Wavefront’s organization, including President and CEO, James Maynard, and members of the board. At time of this update, all have either declined or failed to respond to requests for comment.

A statement has been posted to Wavefront’s homepage confirming the organization has halted operations and entered receivership (which, it should be noted, is not the same thing as bankruptcy).

“After assessing its options in the face of declining sources of revenue, [Wavefront] has determined that the appropriate course of action is to cease operations to ensure that there is an orderly liquidation of its assets for the benefit of its creditors,” the statement reads.

“It is the hope of Wavefront’s board of directors and management that many of these services which have helped increase Canada’s global competitiveness will be maintained and supported by other organizations.”

Update (05/17/18): This article has been updated to include additional information on Wavefront’s status, as well as a statement from the organization.

Douglas Soltys

Douglas Soltys

Douglas Soltys is the Editor-in-Chief of BetaKit and founder of BetaKit Incorporated. He has worked for a few failed companies and written about many more. He spends too much time on the Internet.

  • Sophie and Matt Sophie

    Scroll down to see their Board. https://wavefront.ca/meet-the-team/
    I’m not impressed by the way this has been handled. We’ve seen startups come and go, but increasingly there’s a style, a classy way of handling failure (posting lists of affected staff, etc.) Imagine being a startup whose only mistake has been to trust these people! Now they could be scrambling to cover financial commitments, and find places to work, or even replace gear locked up behind their shuttered doors. The Treasurer of their Board was from KPMG – nice! And I’d think twice before doing business with Brightspark or Fasken Martineau! Totally unprofessional.

    • DynastyTM

      Completely agreed, this is an abysmal failure on the part of the management that will negatively impact the ecosystem for years to come. And yet if you were to read the posts and comments on LinkedIn from former staff and associates, they seem to just dismiss it as nothing and offer empty condolences and platitudes. The echo chamber will continue and individuals associated with these PR factories (call them what they are) will go on convincing investors and promising startups that they offer value when at the end of the day they will leave you holding the bag as evidenced here.

      • Joseph

        Wavefront was a scam top to bottom. And their management team was a bunch of dirt-bags. Leaches on the tech ecosystem. Nothing more.
        Top management was paid bucket loads. What did these jokers really do? Run a temp office space and a “very basic”. And they needed a half dozen highly paid VPs / C’s for that? What a joke.

        They stood at the podium for years preaching “Innovation” and other big words they could barely pronounce. Yet they were unable to create a sustainable business model for themselves and went bust. Leaving creditors and tenants in a lurch. Nice!

        But they also threw lots of parties – mostly for themselves.
        I heard they chartered a yacht one summer – and didn’t even have the decency to invite their “tenants”. Staff only of course…

        • Sophie and Matt Sophie

          Douglas – I look forward to reading more about this. KPMG and Faskens are big firms that offer a lot of professional services that will gloss over this… so they can hide this. But Brightspark… what are they if their word is no good? Who would consider taking their word seriously after this?

          • J. J. Toronto

            Hi,

            Someone needs to push KPMG and Faskens to dig deep into Wavefront’s spending. Did they blow cash recklessly? Was malfeasance involved?
            Was travel and executive spending “excessive”? Did their decisions align with best practices in the government funded not-for-profit sector?

            How much was James Maynard getting paid to run what was essentially a flex office space? Why all the Vice Presidents? How much did they get paid? Why did Wavefront have an enormous IT team when it could have simply outsourced that work (and supported the local IT tech community by doing so)? Why did they decamp from Vancouver and open an expensive office in Toronto? Did they validate the market and test their plan first? Why was Wavefront recruiting and hiring new staff if they were “teetering” on the edge of insolvency, and about to enter creditor protection?

            Who was behind the wheel at Wavefront? And who was looking over his should (should have been Robert MacDougal refusing to approve and sign certain spending).

            What is going to happen to the firms who lost their office spaces? Will these firms get their last months rent back? Did Wavefront know they were going bust when they accepted those final rent cheques? if so, why did they take the rent from the startups? If not, then why not?

            Cash flow is very easy to manage. Money in. Money out. Difference.

        • Alex

          Former staff here from years ago — they don’t charter yachts because obviously, that’s $$$; it was a small yacht that one of the execs owned, so your coloured commentary is incorrect.

          There’s a lot of not-great things about how it was run, but I wouldn’t blame the guy for owning a yacht since he’s had previous executive-level jobs before.

          • J. J. Toronto

            Alex –

            There are “boats”, “yachts” and “ships”. A yacht is generally bigger than what most of us would call a boat, and smaller than a ship. But we can argue over definitions I’m sure. I’d say that if you can put 20+ people on it, then it is (a) big, (b) a yacht, (c) expensive.
            Size doesn’t really matter here.

            The point is – they were running a money strapped not-for-profit. And they chartered a yacht and took the team for a day on the water. And now that you tell me it was provided by “one of the execs” – its stinks even more.

            Was this a case of an exec. charting his own yacht back to the firm he works at? (A government sponsored “not for profit”).
            If true – all I have to say is “they must be morons”. The CFO should have been fired for approving any expenses related to this sort of event. The CEO should have been sacked if he chartered a boat so his team could “hit the water” for a day. The optics on this are brutal!
            Anyone have pictures to post? I’d love to see them if you do.

            I ask this forum:
            – Does anyone have pictures of this “yacht trip”?
            – Who was “the exec” who owned the boat?
            – Did Wavefront pay their own executive to charter his private boat for the day?

            If you don’t mind my building on the boating theme – let me remind you of the following: Wavefront was given millions of tax payer dollars, yet couldn’t keep their ship afloat. They must have blown cash like drunken sailors in port. Those offices weren’t cheap, that is foresure.
            I believe James Maynard and Robert MacDougal and the other VPs should be investigated for potential malfeasance. The accounting firm handling the wind-down should be placed in the lead.

            I’ll tell you something else I’ve learned over the last few years. If you ever see a cockroach when your at a restauant, you can be sure there is never just one. The kitchen is almost certainly filthy, and the basement is likely a mess. I bet Wavefront’s “kitchen” was full of “cockroaches”.

            Can anyone else provide examples? Love to hear from others on this. Can anyone provide some stories or insights on Wavefront?

    • Nevin Thompson

      I guess the subtext is that Wavefront could not find the 1:1 contributions for CAIP? The programming – RevUP and VAP is very good. The timing of the shutdown is very odd — BCIC is holding its BC Tech Summit this week. Presumably the new government in British Columbia couldn’t see the value in continuing Wavefrong? It’s been around for ten years… I actually was working at BCIC when James Maynard started it up.

      It is quite disastrous for the startups that have been affected by this sudden shutdown.