KITCHENER - Inside the "garage" of the former Tannery building in Kitchener, a new economy is being hammered out.

Some workers are developing technology that will transform a large store window into a cool display. Others are working a printer that will make low-cost circuit boards. Still others are creating software services.

This is the VeloCity Garage, an incubator for University of Waterloo spinoff companies.

It is packed to capacity, housing about 30 startups with many more on a waiting list, prompting plans to expand with additional space early next year.

The new Velocity Foundry will specifically support technology hardware companies that are emerging from UW, said VeloCity director Mike Kirkup.

"We have a very solid backlog of companies that want to come into this space if we had to the room for them, but we are officially full at the moment," he said. "The expectation is that we will double the size of the program if we can get the same amount of space."

The hardware companies, involved in everything from nanomaterials to microelectronics and robotics, are hungry for a space of their own, hopefully with labs, Kirkup said.

The growing demand signals the success of VeloCity, which started five years ago with a unique student residence at UW, Kirkup said. The idea was that if entrepreneurially minded students lived together in the same residence, companies would emerge from all of that entrepreneurial energy.

That is exactly what happened. Companies like BufferBox, which was sold to Google, and Pebble, a smartwatch company now located in California, had founders who got their start in the VeloCity residence.

There are now 70 students in the VeloCity residence. Its reputation has spread and many high school students choose to go to UW with hopes of getting into VeloCity, said Kirkup.

With VeloCity succeeding in fostering the entrepreneurial spirit on UW's campus, the need for a space to incubate early stage companies became obvious. So an incubator opened in the Communitech Hub when the former Tannery building was converted into a high-tech office space in 2010. Two years later, it expanded into the present 7,200-square-foot Velocity Garage.

There currently are five hardware companies in the Garage and a number of others are ready to move into the Velocity Foundry when that opens.

In recent years, there has been a resurgence in the startup of technology hardware companies, Kirkup said. Investors are very interested in companies with tangible technologies that they can see and touch, he said.

Thalmic Labs, which makes a wireless armband that reads muscle movements and can be used to control computer interfaces with gestures, is a good example. It started in the Garage and recently moved into its own space. It now employs about 40 people and has raised $14.5 million in venture capital funding.

Voltera, another Garage hardware startup, is developing a printer that can print low-cost circuit boards within minutes. "That's very exciting technology," Kirkup said.

Another company, Lumotune, is creating new display technology that consists of clear plastic sheets that sandwich nanotechnology and can be seamlessly integrated into store windows or buildings. "We are making a whole new generation of displays that use very low power," said Hooman Safaee, one of the firm's co-founders.

Entrepreneurs come to the Garage from different parts of UW's campus.

The founders of Marmot Labs started the business while they were in the master of business, entrepreneurship and technology program. Marmot developed a cloud-based platform that takes the pain out of managing applications for things like grants and awards. The service is already used by Canadian consulate offices in Boston and Silicon Valley and local incubators and agencies that need to manage applications.

Matthew Miner, who co-founded gaming analytics company Lumos with Brad Keys, started in the VeloCity residence on campus and then moved into the Garage.

Popy Dimoulas-Graham, founder of Charity Republic, said the Garage is the perfect environment for young entrepreneurs. The startup licenses a service that school boards use to match high school students to volunteer and co-op placements, and track and validate the students' volunteer and co-op hours.

Loading... Loading... Loading... Loading... Loading... Loading...

Dimoulas-Graham said being in the Garage gives her access to support and mentorship. Her company also has been able to partner with Desire2Learn, a large educational software company that has offices in the Tannery building.

Kirkup said in VeloCity's first five years, the startups it worked with have raised more than $90 million in funding from investors and now employ hundreds of people.

The most important measure of success is the number of "great companies," Waterloo Region has because of VeloCity, he said.