“One has to have a larger risk appetite”: Industry leaders discuss tech innovation at ONRamp event

Talk centres on entrepreneurship in finance, health, cannabis technology

“One has to have a larger risk appetite”: Industry leaders discuss tech innovation at ONRamp event

A panel of industry leaders convened at ONRamp, a U of T-led accelerator, on May 30 to discuss the barriers and opportunities that entrepreneurs face in the highly regulated industries of health, finance, and cannabis technologies.

Greg Pantelic, founder of AHLOT, a cannabis curation company; John Soloninka, founder of health tech company Accelerant Health Innovations; and Teri Kirk, founder of investor-entrepreneur matching program Fundingportal, described their experiences in their respective fields and how they have navigated government regulations.

The event was organized by the Smith School of Business at Queen’s University in association with ONRamp. This was not the first time the two organizations had collaborated — Queen’s partnered with ONRamp in February to expand its entrepreneurs’ networking opportunities.

Breaking into the industry and changing with trends

Pantelic’s AHLOT is a cannabis circulation company that “created the world’s first multi-licensed producers’ sample pack and storage accessory product,” despite not being licensed vendors.

“Our vision was creating experience before and after consuming cannabis,” Pantelic said, citing the overwhelming choices of recreational cannabis available to consumers.

After seeing new sign-ups and subscriptions grow at 40 per cent week-over-week in 2017, Pantelic decided to run AHLOT on a full-time basis. The increasingly growing demand for recreational cannabis following the enactment of the federal Cannabis Act, coupled with the market inefficiency of cannabis sampling, led him to create the Cannabis Collection, a series of one-gram samples from different premium licensed producers.

According to Kirk, “one has to have a larger risk appetite and more capacity for innovation [when pursuing entrepreneurship] in heavily regulated space.” Kirk used Fundingportal as an example explaining the importance of measuring cost and benefit. For example, when matching entrepreneurs with investors, geographical costs and benefits differ between Canada and the US, so proximity is a useful measure for deciding which markets to become involved in.

Regulations and innovations

According to Pantelic, the highly regulated nature of the cannabis industry prompted AHLOT to work with licensed producers rather than wait to obtain its own production license. As its Cannabis Collection collects sample cannabis from different licensed partners, every regulation policy regarding the product is dealt with directly by AHLOTS’ partners.

Kirk highlighted the importance of understanding regulations before entering the marketplace, highlighting how her experience of being a lawyer helped her in this regard. She also pointed out that entering a heavily regulated industry like finance technology requires innovators to embrace larger risks than in traditional industries, especially since latent regulations create more opportunities for failure.

Soloninka seconded this perspective. He mentioned that a strong understanding of regulations would provide a competitive advantage for innovators.

“Fitting into regulation is really strategic for starting your own company,” he said. Apart from that, entrepreneurs should remember that regulatory approvals are mostly regional, which is critical when deciding where to start a business.

To solve this regional regulation issue, Soloninka provided two suggestions: first, working with a consulting company that specializes in global regulatory systems; and second, conducting research on the internet.

Data accessibility

In the cannabis industry, data can be described as necessary but nascent. AHLOT is collecting its data by launching a cannabis circulation campaign, to hire people to provide feedback on recreational cannabis quality.

Kirk added that data allows entrepreneurs to understand the world around them despite it being “massively and heavily regulated.” As such, it may be important for entrepreneurs to take the costs of accessing data into account when making market-entering choices.

Addressing financial illiteracy through art

UTM adjunct professor Radha Maharaj’s campaign seeks to improve student financial literacy

Addressing financial illiteracy through art

Financial illiteracy can be a recurring issue for many university students, so Dr. Radha Maharaj of UTM’s Communication, Culture, Information and Technology department wants to tackle the issue through a campaign called Elly. Maharaj’s financial literacy campaign involves a study, a survey, an artistic competition, and a series of interviews, all of which aim to improve financial literacy.

The study aims to assess the level of financial literacy among students and the extent to which students are affected by debt and other financial issues.

The survey, which runs from September to March, is an opportunity for all UTM students to take stock of where they are financially while also voicing any concerns and issues that they may have about personal finance.

The competition aspect, entitled “Elly in Action,” involves students submitting a creative presentation — be it song, dance, art, or a short film — that has a financial theme. The campaign encourages students to artistically explore topics such as being burdened with student debt or getting finances in order. The submission period for the competition ends on November 15.

Finally, the interview component is meant for students to ask questions, receive advice, and share their concerns regarding personal finance management.

Maharaj wrote in an email to The Varsity, “There is a taboo around talking about money. This is a generational problem. It’s simply a topic that we have not discussed about openly in the past and it continues today.” She added that students “are usually overwhelmed and apprehensive by the topic itself, because finance has a reputation of being complicated and boring.”

The use of music, dance, and art therefore aims to connect with finance in a way that students can more easily engage with. According to Maharaj, though art and finance are seemingly juxtaposed to each other, they “are in fact essential and complementary to our daily existence. Elly is the start of the movement to make this connection.” Maharaj is also in the process of designing “immersive personal finance courses” that will incorporate creative works.

Engaging with students through a seemingly non-traditional manner is key for Maharaj, who is also eager to improve the program and determine the best way to deliver the appropriate material to students who need assistance and are interested in learning more. “We do a good job of preparing students for the world of work and making money,” Maharaj said, “but we hardly spend the time teaching them how to manage that money in their personal life.”

In conversation with TD’s VP of Online Technology

U of T alum Sladjana Jovanovic talks digital transformation, path to leadership

In conversation with TD’s VP of Online Technology

In recent years, online technology has shifted its focus to industries such as finance, or financial technology, in a move to innovate outdated banking systems. Financial technology includes everything from mobile banking to investment and financial strategy platforms.

Companies like TD have realized both the impact of financial technology on consumer trends. In fact, TD has recently pledged $4 million toward the Rotman School of Management to form the TD Management Data & Analytics Lab, which will further contribute to advancements in the field of data analytics. The lab is an addition to the Rotman Financial Innovation Hub in Advanced Analytics that encourages students to build on their analytical skills, particularly those relevant to the financial industry.  

The Varsity corresponded with Sladjana Jovanovic, Vice-President of Online Technology at TD and a U of T alum. Jovanovic completed her undergraduate degree in the Department of Computer Science and recently earned her Executive MBA from the Rotman School of Management.

The Varsity: What kinds of projects do you work on as VP of Online Technology and what relevance do they have at TD?

Sladjana Jovanovic: While our customers continue to use our online applications, they are also interacting more and more through our mobile applications. With that, our online platforms are transforming to support multiple channels and put mobile first. It is exciting to drive that transformation.

We are driving the digital transformation for many TD’s businesses including Banking, Wealth and Insurance. One digital capability at a time, we are creating legendary experiences for our customers and building the bank of the future.

TV: How do you think your education at U of T shaped your journey? What experiences led you to pursue tech?

SJ: My path to technology was not a straight one. While I initially considered engineering, as a young woman, I did not have a lot of support. [Furthermore], none of my female friends went into engineering. Instead, I enrolled myself into architecture, which was a good fit based on my interest in math and creative arts.

Two years later, I knew that architecture was not my passion and I decided to give Computer Science a chance. I had mixed feelings about it to say the least as I had never tried coding before. One of my worries was that my creative and artistic side would not be fulfilled. Getting into Computer Science at U of T was a critical decision for me.

Only few months into the program, I knew that I had made the right choice. I learned that it required a lot of creativity to write elegant, reusable, and expandable code and create user-friendly, life-enriching applications. Writing a computer program was like creating artwork. This set a basis for me on how I view technology and why I have such a huge passion for it. Being a part of the technology club has been awesome and I am very happy to have followed my gut feeling and chosen this career for myself.

TV: What would you tell your younger self about pursuing a career in tech?

SJ: Don’t let anyone tell you that you shouldn’t do something because you are categorized in a certain way – a woman, a person of color, an aboriginal, an immigrant … the list goes on. I know that there is nothing I cannot do.

TV: Budget 2018 has outlined some ways Ontario can promote equality and diversity in the workplace. What do you think could be done in the tech industry to better support women?

SJ: This is a very important question that led me to be an active observer and listener, so I can get closer to the issue. I feel that we have to look at the high school period as a time when our children make critical choices.

Several high school students told me that there was a lot of focus on science in their school, and less focus on technology.

If we can empower teachers and high schools to champion technology with all students equally, then I feel more students would consider it.

 

This interview has been edited for length and clarity.

Will the next financial apocalypse be Canadian?

A lack of financial literacy among students leaves us vulnerable amid recent events

Will the next financial apocalypse be Canadian?

This February, the CEO of Home Capital Group stepped down amid allegations of broker fraud, which culminated in a violent stock price drop. Immediate comparisons were drawn between this case and the American housing market crash in 2008, and predictions of an impending Canadian economic collapse were strewn across major papers like Maclean’s, the Financial Post, and Forbes.

These predictions were problematic for two reasons. First, news sources that constantly flip between extreme fear-mongering and a disdainful casualness and overuse inaccessible financial terminology make it extremely difficult for students to understand our financial system.

Secondly, whether or not this is a financial crisis, students will be the first demographic that the Home Capital fiasco will affect, regardless of whether we are paying attention.

Home Capital is an alternative mortgage lender that is part of a larger group, Home Trust Company. Despite being the largest of its kind in Canada, the company is effectively a minnow in the Canadian financial pond when compared to traditional lenders. As an “alternative” lender, they lend money to clients who are often turned away from traditional banks due to uneven credit scores — including students.

Two years ago, Home Capital disclosed that 45 of its mortgage brokers had been falsifying borrower income and employment information. Then, in April 2017, the Ontario Securities Commission charged the company for failing to inform their investors about the implications of these actions. This caused investors to pull out from the company, and even after a $2 billion line of credit, the company is in danger of closing.

The subsequent panic of those who invested in the company was understandable: a similar series of events sunk the American economy in 2008. At the time, mortgage brokers were increasingly pushing mortgages to borrowers with shaky credit histories who would be unable to pay them back. Big banks would then package these shaky mortgages into allegedly low-risk, subprime securities and people would invest money in them, betting on the fact that they wouldn’t fail. The banks were able to disguise the fact that these mortgages were given to borrowers with falsified income statements and bad credit history, due to to ratings agencies giving ‘A’ ratings to bad mortgages. Eventually, people failed to pay their mortgages, and millions of Americans ended up homeless and losing millions. The entire economy collapsed.

At the same time, it can be argued that people are wrong in thinking that this is the start of that same pattern in Canada. Home Capital is a relatively small mortgage lender in a very niche part of the market. They only lend to individuals that had been rejected by the larger, heavily-regulated lenders, and they were held accountable for it, something that never happened in America circa 2008.

What this does prove is that there is a growing need for financial literacy, especially amongst students. It is easy to believe any version of the facts that are being thrown at you, especially ones that include phrases like ‘collateralized debt obligations’ and ‘low-risk, subprime securities’. Regrettably, this can lead to serious implications being lost in the financial terminology.

If Home Capital, the largest alternative lender is going to incur losses, it will be harder for other alternative lenders to access funds, resulting in higher mortgage rates. This is problematic for adults who have only been out of school for a couple of years and are unable to obtain a mortgage from traditional banks.

Now, most of us are probably not going to be buying a house right out of school, and — fingers crossed — some of us might never have to use an alternative mortgage lender like Home Capital. But the need for us to understand a financial system that can be incomprehensible to outsiders is more important than ever. Insufficient-funds fees, short-term teaser interest rates, and payday loans, while seemingly innocuous, are common money pitfalls that students regularly fall into because of a lack of financial understanding.

It is idealistic to say that every student should have an in-depth knowledge of such fascinating topics as the Canadian housing market, the intricacies of mortgage lending, and the muddy depths of bank transaction fees. But, as millions of people learned in 2008, these structures have a huge effect on our lives. At the very least, we have an obligation to try.

 

Claire Velikonja is an incoming second-year student at the Faculty of Engineering studying Chemical Engineering.

 

U of T forecasts net income of $138.2 million, $70.1 million deficit

Actual outstanding debt $1 billion, credit rating remains investment grade

U of T forecasts net income of $138.2 million, $70.1 million deficit

The University of Toronto’s financial results and report on debt reveal that U of T forecasts a net income of $138.2 million and projects net assets to be at $4.35 billion. The forecasted net income is a decrease from last year’s net income of $287.8 million, while the value of last year’s net assets was $4.38 billion.

The forecast, which includes the university’s projected revenue, expenses, net income, and changes in net assets for the fiscal year ending on April 30, 2016, was presented on January 25 to the Governing Council Business Board. The board oversees the university’s financial transactions.

These forecasts are based on a projected investment return of 0.4 per cent, an endowment payout of $78.3 million, an increase of $96.4 million in reserves, and an increase of $23.7 million for future divisional capital expenditures. The university acknowledges that it only has interim information regarding divisionally controlled revenue and expenses, and that investment returns are uncertain.

The university also projects a deficit of $70.1 million, which is a drop from the $89.5 million deficit run during the 2015 fiscal year. This has been partially attributed to the $22.9 million increase in tuition fee revenue, correlated with an increase in enrolment from international undergraduate students, who currently pay over five times more than domestic students.

The debt report

This report is comprised of three parts: the annual debt strategy review, the status report on debt, and the credit report by Moody’s Investors Service.

According to the status report on debt, the university allocated $1.218 billion in borrowing room, with $150 million allocated to pensions and $200 million allocated to other internal debt. The university also allocated $868 million for external components, which includes $15 million for the expansion and renovation of the Recreation Wing at UTSC.

The University of Toronto’s actual outstanding debt as of October 2015 totals $999.9 million. Of that figure, $123.3 million is pension debt while $158.9 million comes from other internal debt.

External debt makes up $717.6 million, the bulk of which is in the form of unsecured bonds issued by the university.

The university’s credit rating is unchanged from last year; Moody’s gave the university an Aa2 rating, while Standard & Poor’s and Dominion Bond Service assigned a rating of AA. These ratings are considered investment grade.

Currently, U of T’s debt policy limit is set at a debt burden ratio of five per cent. This means that the debt and interest should not exceed five per cent of total expenditures. This is only the university’s acceptable limit; the recommended upper limit is set at seven per cent.

According to the annual debt strategy review, the university’s debt policy limit was set to $1.401 billion as of April 2015, and the university expects this to increase by an additional $350 million to $1.75 billion by April 2021.

The review also states that a one per cent increase in the interest rate would result in the reduction of the limit between $53 million and $88 million, while a two per cent increase would see a reduction between $95 million and $158 million.