Ontario Centres of Excellence (OCE) has reached an agreement with the Ontario Municipal Employees Retirement System (OMERS) and its subsidiary Oxford Properties to acquire the licence and space belonging to recently shuttered Toronto accelerator OneEleven, The Logic has learned.
The Ontario Centres of Excellence is taking over OneEleven from OMERS and Oxford Properties, after months of negotiations involving multiple groups of investors and operators to try and save a space that occupants say is unmatched in its ability to support and boost entrepreneurs and their businesses. The Logic spoke to multiple stakeholders during the negotiation period. “It was much less a bidding war and more a competition of visions on how the ecosystem should work,” said the source with knowledge of the OCE deal.
According to a source close to the deal who was not authorized to speak publicly, OCE will pay Oxford around $3 million to acquire OneEleven under the terms of the deal.
In a statement to The Logic, OCE spokesperson Sandy Bowers confirmed Tuesday the government agency had “entered into a lease with Oxford Properties for 325 Front Street West” and “plans to run OneEleven on a self-sustaining basis.” Bowers said “the IP and naming rights are being transferred to OCE at no cost.” On Monday, Bowers told The Logic that “OCE paying Oxford for anything other than the rental of the space is not a consideration.”
The space will be reduced to one floor from the two it previously occupied at 325 Front St. W. and will be officially up and running after Labour Day, the source said. A new managing director and programming will be announced within the next two weeks. While OCE will be the main operator of the accelerator, both Ryerson University and the MaRS Institute will be active advisers in OneEleven’s activities, the source said.
Discussions with the federal government are ongoing for additional funding related to the deal, the source said.
OMERS and the offices of federal Economic Development Minister Mélanie Joly and Toronto Mayor John Tory did not immediately respond to The Logic’s requests for comment. A spokesperson for Vic Fedeli, Ontario’s economic development minister, referred The Logic to OCE for comment.
“Oxford and OCE have completed a lease agreement for one floor of the OneEleven space at 325 Front Street,” spokesperson Daniel O’Donnell said in a statement to The Logic on Tuesday. “To help continue the work and legacy of OneEleven, Oxford will transfer the naming rights and intellectual property of OneEleven to OCE at zero cost.”
In April, OneEleven announced it was shutting down. The OCE takeover comes after months of negotiations involving multiple groups of investors and operators to try and save a space that occupants say is unmatched in its ability to support and boost entrepreneurs and their businesses.
The Logic spoke to multiple stakeholders during the negotiation period, from tenants to hopeful investors, who desperately tried to ensure OneEleven, once home to Canadian startups like Wealthsimple and Borrowell, maintained its place in the city’s innovation ecosystem. “It was much less a bidding war and more a competition of visions on how the ecosystem should work,” said the source with knowledge of the OCE deal.
OneEleven was initially founded as a non-profit in 2013 by the OCE, Ryerson University and OMERS Ventures. OMERS then incorporated the organization as a for-profit entity in 2018, and it signed a lease with Oxford for the space at 325 Front St. W. until 2026. In May 2019, OneEleven said it would shut down its Ottawa location and put its London expansion plans on hold. A month later, nearly half its executive team left. Soon after, CEO Dean Hopkins left to become Oxford’s chief operating officer.
When the pandemic began in March, OneEleven was one of the first startup hubs to allow tenants to defer rent for April and May, and move programming online. But a month later, executive director Siri Agrell and board chair Hopkins announced its closure, citing financial constraints caused by the COVID-19 pandemic. The for-profit organization’s “model was existentially threatened” by the loss of membership and partnership fees, they wrote in a note posted to the OneEleven website.
Zoom.ai CEO and OneEleven tenant Roy Pereira told The Logic the closure and the subsequent headlines about the messy behind-the-scenes were “a pretty big emotional hit” for tenants. “It was a warm, safe place for us to be in and grow,” he said. “Until it wasn’t.”
OCE, a founding partner, called it a “blow” in a post, saying the space “acted as a tireless advocate across the innovation sector” and “permanently shaped the future of Ontario’s tech system.” One city official told The Logic that Tory “went through the roof” when he heard the news.
Pereira estimates that 15 per cent of the space was vacant before the pandemic hit. After the OneEleven team was let go, Oxford began issuing confusing and conflicting messages on the issue of renewed leases and waived rent. “There was a general consensus among founders that COVID had very little to do with the shutdown,” he said.
Representatives of OCE have communicated with officials from the Federal Economic Development Agency for Southern Ontario four times since OneEleven’s closure was announced at the end of April. It’s also talked with executives at Innovation, Science and Economic Development Canada, including Joly’s chief of staff Daniel Lauzon in June.
Sources told BetaKit in June that before the shutdown, OneEleven employees had prepared a plan to keep the accelerator running without evicting tenants or laying off staff, including finding a new owner. The organization’s board reportedly rejected that plan.
Following the closure announcement, almost 50 founders operating out of OneEleven came together to talk about how to save the space and to whom they should reach out. “We couldn’t change the past, but we could change the future,” Perriera said. They set up a Slack workspace to talk privately because they were uncomfortable that Oxford was including their lawyer on all communications, he said.
A number of OneEleven tenants approached OCE, which is housed in the same building a floor below, within days of the closure to ask for funding to save the space. OCE then began frantic discussions with Oxford and OMERS, with the goal of maintaining OneEleven’s widely lauded collaborative spirit.
“There was not a lot of time to sit and ponder on this.” the source said.
While OCE was deliberating, Mohamad Fakih, a Toronto entrepreneur known best for starting Paramount Fine Foods, was having his own conversations with Oxford to see if he could play a role in saving OneEleven. “Toronto’s reputation as a tech hub was on the line,” he told The Logic.
Fakih said he has invested in startups and mentored founders, some of whom were at OneEleven. In the weeks after the closure, he discussed a partnership with OCE and MaRS to run it as a private-sector space “for entrepreneurs, run by entrepreneurs” and not as “a bureaucratic organisation that costs taxpayer money.” His proposal, delivered on May 19, included buying OneEleven and launching a seed fund to invest in early-stage startups, turning the space into “a lean, profit-centre that would continue to grow organically off its own revenues and investments.”
OMERS dismissed it almost immediately, Fakih said, despite external experts and tenants voicing private support for it. He said the fund was adamant about not adopting a for-profit model, and ended conversations with him to “entertain deeper conversations with OCE.” In June, BetaKit reported that Oxford had chosen OCE’s proposal.
One person familiar with Fakih’s proposal said the entrepreneur “doesn’t have a significant … tech background,” and wasn’t an “active voice” in the tech sector. But tenants like Pereira were interested. “I would prefer an entrepreneur lead this because they understand what we need, as opposed to a government agency, who doesn’t know.”
Fakih insists his interest was genuine. “I really wanted to help,” he said. “I didn’t want that great institution to go down…. I wanted to save it as OneEleven, as an entity. Instead, the same people who made the decision to shut down the company had the main say on how to save it.”
It’s a sentiment Pereira shares. While he’s encouraged by how OCE, which has reached out to many tenants like him for feedback and ideas, is planning for the reopening, he is unsure if OneEleven will return to the way it was under the new leadership.
“If they really wanted to help the tech ecosystem, they would give it to an entrepreneur, because that would allow OneEleven to go back to what it was,” Pereira said.
“There’s a lot of anger and a lack of trust,” he said. “All we’re looking for is that collaborative culture that existed. That’s really what OneEleven meant to us…. The number-one thing we want to get back, that we miss the most, that hurts the most to lose, is the collaborative culture.”
With files from Murad Hemmadi.
This story has been updated to include comment from Oxford Properties and with additional comment from OCE.