MaRS occupies 1.5 million square feet on downtown Toronto’s hospital row and 55,000 square feet at a Waterfront Toronto building.Sammy Kogan/The Globe and Mail
MaRS Discovery District has slashed its senior ranks and is resetting its business model as one of Canada’s largest innovation support organizations heads into a potential funding crunch.
According to two sources familiar with the matter, the Toronto organization this week cut about 20 jobs including many at the top ranks.
One key departure is chief delivery officer Krista Jones, who e-mailed dozens of women across the innovation sector Tuesday to say she would be leaving her $346,000-a-year job at the end of June. That is less than two years after the 15-year MaRS veteran received a promotion and substantial raise.
Chief financial officer Nicole Barry, who was paid $326,000 last year, is also leaving.
The Globe and Mail is not identifying the sources as they are not authorized to discuss the matter.
Chief executive Alison Nankivell said in a statement to The Globe that MaRS, in an effort to ensure its long-term sustainability, is “resetting our business model, which includes seeking to significantly increase engagement with the private sector and philanthropic circles while we continue to partner with all levels of government. We are also examining how our platform of spaces, programs, and community in the areas of health, climate, and transformative technology can propel Canadian innovation in a shifting global context.”
Ms. Nankivell through a spokesperson declined to confirm the number or scope of layoffs or elaborate on her plans, but said in her statement: “Our path forward necessitates changes toward a more agile and lean organizational structure that reduces hierarchy and leadership roles in favour of a reallocation of resources to support programming that more effectively supports founders, fosters even greater ecosystem collaboration, and ultimately increases our impact.”
It’s the first significant move by Ms. Nankivell since taking the helm of MaRS in March after leading fund investments and global scaling for Business Development Bank of Canada’s private capital group BDC Capital. When her appointment was announced last December, she told The Globe and Mail, “I don’t think anything significantly needs foundational change,” at MaRS, saying, “It’s more of a nudging of certain aspects of the overall programming and partnership with the community in certain directions of emphasis.”
MaRS occupies 1.5 million square feet on downtown Toronto’s hospital row and 55,000 square feet at Toronto’s Waterfront Innovation Centre building. It has 120 tenants including startups, venture capitalists and foreign multinational giants and provides advisory services to startups building health and climate technologies.
The organization, which receives two-thirds of its revenue from provincial and federal grants, has faced controversy over its real estate and questions about its sprawling mandate and effectiveness in helping Canadian tech startups scale up into giants. A key question has been whether it is more of a real estate play or an innovation stimulant.
MaRS has experienced a substantial drop in non-government grant revenues, including fees for services to startups, donations and event sponsorships, since 2019, the year before the pandemic began. Revenues from sources other than federal and provincial grants fell to $10.1-million in its fiscal year ended March 31, 2023, from $29.1-million four years earlier. Revenues other than those from any form of government funding dropped by 32.7 per cent over the same period.
Total revenues dropped by 40 per cent, to $29.6-million in fiscal 2023 from 2019 levels, while employee costs rose by 2.5 per cent over that period, reaching $23.9-million last year. MaRS lost money in all five years. Ms. Nankivell’s predecessor, Yung Wu saw his compensation jump by 37 per cent, to $650,625 last year from $475,000 in 2019, according to Ontario’s sunshine list, although his 2023 pay included a $157,500 bonus for 2024 that was paid early. Without that additional bonus, his pay would have been $525,000 last year, or 10.5 per cent higher than 2019.
Meanwhile, MaRS reached the end of a two-year extension of its funding agreement with the Ontario government two months ago that had the province kick in $10-million annually. A portion of its federal government funding, for a small business-assistance program, ran out on Dec. 31, and its future government funding status is uncertain.
MaRS started as the latest in a decades-long effort to help bring inventions from the University of Toronto to market after the sale of its vaccine production business Connaught Labs in 1972. The University of Toronto Innovations Foundation, launched in the 1980s, aimed to encourage on-campus researchers and professors to take their intellectual property to market, but a university panel in 2004 concluded it was not living up to its mandate and recommended its dismantling and that the institution instead partner with MaRS.
By that point MaRS, founded in 2000, was in its infancy. It was the brainchild of biotech entrepreneur John Evans and originally stood for Medical and Related Sciences. Inspired by Kendall Square, Boston’s biotechnology zone, the group set out to build a tower on property bought from the University Health Network. But its U.S. development partner bailed after the 2008-09 financial crisis and the province had to step in to complete the project, which drew the ire of the auditor-general. In 2017, MaRS completed a $290-million private financing of the tower project, enabling it to repay three-quarters of the nearly $400-million in loans received from Ontario.
Over the years, MaRS expanded its support to startups across all areas of technology and started a venture capital fund called MaRS Investment Accelerator Fund. It spun out a new private-sector venture-capital fund in 2022 called Graphite Ventures. But MaRS and other government-funded startup hub bodies have faced heightened scrutiny into their effectiveness in recent years by Ontario’s Progressive Conservative government and sought to re-establish their relevance as regional economic stimulators.
Editor’s note: The Globe reported on June 4 that MaRS Discovery District’s non-government revenues fell to $10.1-million in its fiscal year ended March 31, 2023, from $29.1-million four years earlier. In fact, all revenues other than restricted federal and provincial grants fell by that amount. However, $14.1-million of MaRS revenues in 2019 was in fact funding from the Ontario and Canadian governments for MaRS to administer partner payment programs on their behalf and provided to participants on a flow-through basis. The story has been updated to account for these details. (June 7) This article was updated to clarify the composition of Yung Wu's compensation.