Coronavirus stalls funding, delays distribution for Manitoba tech startups

The outbreak of coronavirus has put the growth of a Manitoba startup on hold by delaying possible funding and access to a huge foreign market, says the company's head.

"We hope that it will just result in a delay. If it continues for a long time we may lose opportunities," said Ab Freig, CEO of Triple 3 Biotechnology.

The Winnipeg startup manufactures a Type 2 collagen supplement. Supplements containing collagen, a protein naturally produced in the body, are taken by people hoping to improve skin and hair, or to ease joint pain.

The collagen market is worth up to $6 billion, and 80 per cent of collagen consumption is in China, Freig said.

"The main market for our product is in China, not Japan, not … anywhere else."

Freig was planning to go to China sometime this year to meet distributors, as Triple 3 plans to start making its product.

The trouble is that he isn't sure when he will be able to travel to China to meet possible distributors, and he needs money to make his product.

"With the virus now, things are on hold. We cannot do business just on the phone," Freig said.

Travel restrictions hamper business deals

But that's exactly what he's had to attempt, after a possible investor from China had to cancel his trip to Winnipeg.

"Building relationship, building trust, meeting people in person — that is one of the important aspects of dealing with China," Freig said. "We just have to build the relationship, and a relationship does not happen just over the phone." 

Travel has significantly slowed down in China in efforts to curb the spread of the potentially deadly coronavirus, now officially known as COVID-19, but that's also dragging down other industries.

Freig hopes business in China will return to normal by the summer. If not, the impact on his business will be very costly, he said. 

"As entrepreneurs, we're optimistic things will turn around sooner than later," he said. "Right now our business, it would be affected by no interaction in person with Chinese investors." 

Triple 3 is a client company of the Manitoba Technology Accelerator, a non-profit that helps technology concepts become functioning businesses.

MTA works with people in China to access investments, skill sets and markets, all so Manitoba startups can get off the ground. The business accelerator has been developing its relationship with investors in China for seven years, says its CEO, and there were high hopes for this year.

"Like a farmer, you plant seeds and then you harvest," said Marshall Ring. "This was going to be a great year of harvest for us and now it's been delayed."

MTA arranged for a venture capitalist to come to Winnipeg and invest up to $10 million into Manitoba businesses that work with the accelerator, but that trip was cancelled after the coronavirus outbreak. Freig couldn't say if Triple 3 would be one of the companies that might benefit from this investor. 

The business accelerator and its clients will be OK, said Ring, "but it's slowing progress down."

"Now we're just sort of talking, trying to keep the relationship warm. But until they're here and they see the technology and get the demos and meet the people, we can't make too much progress."

The Manitoba Technology Accelerator was also going to make an announcement in April about a medical device assembly company with about $2 million of money from Chinese investors.

That announcement, too, has been put on hold for now.