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University of Toronto's Creative Destruction Lab in Toronto on Thursday, March 9, 2017.

Michelle Siu/The Globe and Mail

Creative Destruction Lab is blowing up.

The acclaimed tech startup program based at University of Toronto's Rotman School of Management will reveal Thursday that it is expanding to Calgary, Montreal and Halifax, after its first external foray this year when it partnered with University of British Columbia's Sauder School of Business to open a Vancouver lab.

CDL is also planning a U of T-based offshoot focused on creating firms that specialize in artificial intelligence "machine learning," using powerful quantum computers from D-Wave Systems, one of Canada's emerging technology stars.

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"It's about taking a program that's working extremely well and doing that on a larger platform," said Rotman dean Tiff Macklem. "This is an opportunity to achieve the scale Canada needs to take on the world."

The CDL expansion – through partnerships with the University of Calgary's Haskayne School of Business, École des hautes études commerciales de Montréal (HEC) and the Rowe School of Business at Dalhousie University – initially will be bankrolled by some of Canada's most successful entrepreneurs, including Montreal's billionaire Desmarais family, Calgary construction-materials magnate Scott Burns and ex-Electronic Arts president-turned-venture-capitalist Paul Lee of Vancouver.

It represents a rare co-operative effort among rival business schools, but it's in the name of a big goal: to work collectively to improve Canada's competitiveness.

All CDL expanded programs are expected to start within a year.

"We're phenomenally excited about the program and think it will be a huge component of the socioeconomic development of the region," said Louis Beaubien, director of the Rowe school, where the local CDL program will focus on ocean and agriculture technology.

The HEC-CDL program will specialize in data science; in Calgary, the focus will be on innovation in the energy sector.

Former Lululemon Athletica general manager Darrell Kopke has joined as CDL's chief operating officer to lead the expansion. Talks are under way to start a New York University CDL in 2018.

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CDL launched in 2012 with a goal for participating firms to create $50-million in equity value after five years, based on valuations from investors. After just over four years, CDL alumni surpassed the $1-billion mark, led by Waterloo, Ont., wearable technology developer Thalmic Labs Inc.

Now, says CDL creator and Rotman business professor Ajay Agrawal, the target is for CDL graduates to create $100-billion in equity value by 2027, and for half of those companies to be Canadian based (several CDL participants hail from abroad).

"In order to move the needle we have to have a goal like that," he said. "That's why we're taking some big swings in areas like AI and quantum computing."

CDL differs from incubators and accelerator programs that typically offer a home and mentoring to startups in exchange for equity.

Instead, cohorts of 25 companies start the nine-month CDL program by meeting with seven accomplished entrepreneurs and investors known as mentors. The firms are each assigned three objectives that they must meet within eight weeks. (mentors have included early Yahoo president Jeff Mallett, serial entrepreneur Mike Serbinis, and Barney Pell, a Silicon Valley entrepreneur who once led NASA's artificial intelligence branch). The startups are assessed by "chief scientists" from the university and aided by MBA students to devise strategies, find customers and secure financing.

If startups don't meet their objectives or fail to convince mentors that they can scale into giants, they are voted out at the next meeting. If they make it, they get three more objectives. Fewer than half finish. Those that do often raise funds from the mentors – and from Silicon Valley investors who have increasingly swelled the ranks of observers at CDL sessions.

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In 2015-16, CDL added a second cohort focused on "machine learning" AI firms, despite concerns there weren't enough to support a specialized stream. The program was so successful and drew so many investors to watch the meetings that U of T added another machine learning stream this year – and expanded to Sauder.

Mr. Agrawal said expansion plans took flight after several schools approached asking if they could observe. While some at Rotman were reluctant to collaborate with rivals, "the prevailing view became that we're not competing against Calgary or UBC or HEC" – but Silicon Valley.

Meanwhile, the UBC-CDL program is off to a strong start. After two meetings, four of the 25 firms have raised seed financing. "The early signs are that it has worked out well," said Vancouver venture capitalist Boris Wertz, one of the mentors. "That gives me hope we can replicate most of the success" as CDL expands.

That's a tall order – next year, 225 firms will enter the various CDL labs, up from 25 just three years ago.

"Maintaining the quality is our No. 1 concern, and we'll be monitoring that carefully with all the sites," Mr. Agrawal said.

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