Cleantech Podcast | Episode 2 - Richard Chénier "It is at the level of economic models that the future of our planet will be played out."

For the second episode of this podcast, we travel across the Atlantic to Quebec. We had the pleasure of interviewing Richard Chénier, the CEO of CENTECH, a deeptech incubator that was recently ranked among the top ten best performing university business incubators in the world.

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BXVentures: Hello Richard. Can you introduce us to CENTECH?

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Richard Chénier: CENTECH is a non-profit organisation based in Montreal that focuses specifically on deeptech, i.e., advanced technologies. Manufacturing, logistics, telecommunications, electronics, energy, and industrial cleantech are our primary areas of activity. We also have a digital health and medical devices component, but most of our activities are related to industrial processes. CENTECH is also affiliated with the École de Technologie Supérieure, the second largest engineering school in both Quebec and Canada.

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BXVentures: Your academic accolades include a bachelor's degree in psychology and a master's degree in communications. Nowadays, you lead a university incubator specialising in deeptech. From your initial academic background, how did you get here?

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Richard Chénier: To be honest, it was a stroke of luck (smile). CENTECH is an old incubator founded in 1996. At the time, there was hardly any university incubators. New incubators, with innovative models and fresh mentalities only appeared around 2015-2016. In the face of this new wave, CENTECH's business model quickly became old and lost a lot of its appeal. So, they were looking for a new CEO, and as one of BTS's directors I decided, along with the general management, to try and bring it back from the dead (laughs). Three and a half years later, we have gone from a fading incubator in 2016 to one of the ten most successful university incubators in the world!

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BXVentures: Deeptech is not easy to define, and it’s even harder to find a single definition that fits all. How would you define it?

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Richard Chénier: I define deeptech as products that meet specific needs from science and engineering. They are advanced technologies that are driven by science. It is not just about low-tech or middle tech; it is about integrating all scientific knowledge into practical, applicable products that fits market needs. Furthermore, a large proportion of CENTECH's entrepreneurs have advanced degrees, such as a master's or doctorate. They have acquired a certain level of knowledge that they are ready to apply to industry.

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BXVentures: Can you give us some examples of projects that CENTECH has supported?

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Richard Chenier: We have a lot of success stories (laughs). CENTECH selects around 100 companies each year for its programmes, and the process we undergo is generally quite long. This is because working with deeptech companies typically involves a slightly longer go-to-market. It’s also why we've been able to grow faster in recent years because we offer support tailored to deeptech entrepreneurs. On average, we launch 15 to 20 early-stage technology companies each year. This has a huge impact on both the Quebec and the Canadian economy; it covers all spheres.

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To give you some examples of projects, look at the company Smart D, which is involved in the energy sector. This company has developed an energy speed regulator for industrial motors, which drastically reduces energy consumption. I am confident this will be a part of future cleantech and climate solutions because we remain dependant on the industry, and we won’t see its demise anytime soon. However, we must find ways to reduce the impact of these industries in their manufacturing processes. Smart D has found a way to reduce energy consumption by 35 to 65% thanks to its speed regulator.

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Another example is Spark Microsystem, which has developed a microchip that replaces Bluetooth for object-to-object communication. When you use Bluetooth with headphones, it consumes a lot of battery power. This company has managed to reduce the energy consumption for object-to-object communication by about 90 to 95%, with an even greater perimeter than Bluetooth is capable of.

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We are also supporting the Solum project, which reproduces sunlight perfectly. It increases the productivity of greenhouses by 65%. This company can produce and reproduce light environments from anywhere in the world. Technically, we could grow kiwis in Antarctica with Solum's light!

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Over the years, our entrepreneurs have developed many solutions that will help alter our environmental impact significantly. Once these deeptech solutions are brought to market, many more solutions and products will come down the same pipeline. What's exciting about my job is that I get to see these solutions develop right from the start and nurture ideas that could have a huge impact on people’s lives, our ability to co-exist, and of course our environment. It is a privilege to be at the forefront of these emerging ideas that could change the course of our future!

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BXVentures: So, you believe that technology will help us face the climate challenges of the future?  

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Richard Chénier: It's imperative. If we want to respond to the climate challenges, it will largely be through the development of new technological solutions. Whether it's in terms of energy, production capacity or even telecommunications. We don't think about it, but the telecommunications we use with all our different connected devices have a huge environmental impact! So, we need to find ways to create green telecoms, green energy, and change our manufacturing processes by integrating the circular economy. This requires innovation, which isn’t necessarily low-tech. It must be deeptech, i.e., disruptive solutions that will change paradigms, that will change the ‘normal’ way of doing things.

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The challenge for deep tech companies lies in the supply chains, as sometimes the solutions produced can change the normal and established supply chains. In my opinion, the difficulty involves integrating these technologies into supply chains, rather than creating the technologies themselves. Even teleportation, which was considered impossible until recently, has been achieved by a Montreal team with certain components. There's not much left that isn't done from a technological point of view.

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Therefore, it’s more of an economic challenge than a technological one. We must find out how we can succeed in integrating these technologies into supply chains because at the moment, they upset the established rules. For example, bringing in a new speed modulator for an industrial engine involves disrupting saturated markets that have systems of agreements and contracts. The solution exits, it is just not integrated into the current supply chain.

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The main obstacle to integrating deep tech technologies into our supply chains is not so much the technologies themselves, but our ability to accelerate this process. Until we can navigate this challenge, it will continue to be a bottleneck.

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BXVentures: Apart from the challenges of integrating these new technologies, do you think there is a real will to act or that things are changing?

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Richard Chénier: Today, environmental challenges are everyone's responsibility. All companies, without exception, must ask themselves what their environmental impact is, whether it’s the way they produce or the moral standards they have set for themselves. Cleantech is everyone's responsibility, including those of start-ups.

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At Centech, we have set up training programmes for all our entrepreneurs, even those who are not directly involved in cleantech, to raise their awareness of environmental and social responsibility issues. Start-up survival depends on these values being integrated from the very start, if not they could be ‘disqualified’ from the market because of an inability to find investors or consumers.

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The last three years have been marked by a growing sense of urgency and responsibility shared by an ever-increasing number of people, including within large companies. Although integrating this awareness is more complex because of their business model, supply chain, and regulations, large corporations have the will to act. I have never felt such determination as I do now, and this dynamic is also present in start-ups.

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I believe that if individuals take responsibility for their environmental impact, it can make a difference. So yes, we can target the ordinary citizen to be more careful, but in my opinion, it is at the commercial level that the future of our planet will be played out. When large companies adopt innovative solutions to reduce their greenhouse gas emissions, and when the suppliers of these solutions are also committed to having the lowest possible environmental impact, we will be on track to addressing the real challenges we face.

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BXVentures: Centech recently signed a partnership agreement with BXVentures, which has a cleantech focus and aims to bring technologies out of university laboratories. What motivated you to sign this partnership?

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Richard Chénier: There are specific challenges that we face in Quebec, but which are also found in many jurisdictions around the world. There is an enormous amount of research being done, but we are having difficulty commercialising it. Historically, there has been a wall between university discoveries and their commercialisation. When you work in academia, trying to commercialize discoveries is viewed as ‘dealing with the devil’. At the same time, our challenges are so great that it is no longer just about creating value and economic wealth by commercialising research or products. It is about implementing solutions that can reduce environmental impacts.

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Traditionally, universities and jurisdictions have used technology transfer offices (TTO’s) to commercialise their discoveries. This "push" approach consists of trying to promote a technology on the market. However, to break down the wall between academic research and the commercialisation of these discoveries, BXVentures has opted for a reverse approach. The studio approach first looks at market needs before identifying academic research that can fulfil this market need, reduce greenhouse gas emissions, and has scalable potential.

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The advantage of venture studios is that they reverse the poles. Rather than starting from academic research and promoting it, they start from the needs of industry and seek to create start-ups to commercialise this research. This is what interested us in the BXVentures model. In addition, they are already established in three European cities and starting to set up in America, which provides us with access to an international network. Because cleantech is not just local! When you make a technology company, you have to be global. In Quebec, we have 8 million inhabitants, which is a microscopic technology market. You don’t need to make technology for 8 million people, but for 8 billion people (laughs).

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BXVentures: Do cleantech companies lack international ambition?

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Richard Chénier: I don't think they lack ambition. The issue lies with governments and companies who must find ways to integrate technological innovations more easily into their supply chains. That’s the challenge. The day that market opportunities are created, it will speed up all processes. But for now, we are still in push mode. We are developing cleantech solutions and hoping to find a buyer in the market. Furthermore, companies tend to minimise risk-taking because they don't want to test something that could put their organisation at risk. Hence the importance of governments stepping in to support corporate risk-taking so that they integrate more innovative technologies, especially those from start-ups.

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Once governments support manufacturers in integrating products that reduce their greenhouse gas emissions and allows start-ups to access markets and accelerate their development, we will make great progress. But to get there, tough decisions need to be made, as this can sometimes mean the demise of a company whose product is replaced in the supply chain.

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BXVentures: What is the Canadian government's position on this issue?

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Richard Chénier: As is the same in many jurisdictions around the world, everyone is asking how to accelerate technology transfer, but we are yet to see enough concrete measures. We have seen the emergence of certain programmes aimed at developing and supporting risk-taking via technology start-ups, but this is still anecdotal in Canada. This is my personal mission! We need to find ways to open markets for our innovative start-ups. In France there are new government programmes that question whether manufacturers should work with start-ups and have access to funding and support, but in Canada, this kind of discussion is not yet taking place. Much more needs to be done.

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BXVentures: Why did you decide to sign a partnership with BXVentures?

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Richard Chénier: Working with BXVentures gives us access to international cleantech markets. It also allows us to demonstrate our ability to change the usual paradigms of technology transfer, moving from a techno-push approach to a techno-pull approach.

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When we identify a need and integrate the solutions into an international circuit, it creates economic wealth not only for Quebec but also for Canada and other jurisdictions around the world. For me, it’s a win-win situation.

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In economics, we often talk about the balance of trade. Dynamic economic activity requires both imports and exports and as a rule of thumb, we want to be exporting more than we import. With technology, we have no choice, we consume technology from all over the world. For example, in my hometown of Quebec, we must ensure our technologies are available at the international level to prevent further trade imbalances. At the same time, our industries need to remain competitive and have access to innovations produced both locally and globally.

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BXVentures: Cleantech, as we define it today, emerged in the early 2000s and experienced an investment boom that quickly faded. Today we see a renewed interest in cleantech. Do you think this interest is set to last this time?

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Richard Chénier: We have no choice! Our heads may as well be in the sand if we don't understand that the climate emergency is the number one challenge facing our planet today. As I mentioned earlier, it is everyone's responsibility. What’s encouraging this time is that industry is finally aware that they are going to have to do their part. I think the failure in 2000 was because the sense of urgency was not as prominent, and there wasn’t as much pressure on GHG emissions. Today, we see more standards, constraints, and requirements that force major players to play their part, or risk being disqualified from the market. They have as much, if not more responsibility as everyone else.

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Previously, only economic parameters were required to be successful, but this has changed in the last three years. Today, you can be economically viable, but if you have no regard for environmental impact, it will be difficult to secure investment or find support. You may even be boycotted. This was not the case in 2000. No one put their business at risk by ignoring its environmental impact. Instead, companies considered their impacts if it was in line with their values or market positioning rather because of a real constraint.

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Today, many companies want to reduce their GHG emissions therefore, they will need to implement solutions that facilitate this desire. Therefore, supply and finance chains are being transformed to accelerate this process.

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BXVentures: Are you still optimistic?

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Richard Chénier: The climate situation can sometimes seem discouraging, but I am one of the optimists. I believe that all the solutions are already available. The big challenge is fitting all the pieces of the puzzle together and accelerating the integration of these innovations into our different supply chains. This requires willingness and flexibility on the part of all players, not just companies. Laws and regulations in some countries or industries would need to be reviewed to speed up these integrations. However, all the elements are there. What’s missing is a more coherent and global vision to fit all these elements together. In short, I am optimistic because the required sense of urgency is there, it’s shared by all, and everyone is trying to accelerate their own processes to make the chain stick.