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The story of Canada's fastest growing technology companies shows that subtle changes are gradually redefining the heavily scarred industry.

Entrepreneurs are shifting their attention from traditional projects, such as business software, to developing new products and services around converged telecommunications, new media and alternative energy. They are expanding beyond the well-worn tech patch defined by Montreal, Ottawa, Toronto and Kitchener-Waterloo, putting stakes down in Calgary and Vancouver.

Canada's emerging tech companies are also reaching far beyond North America for their customers, they are funded by private partners more than the traditional venture capitalist, and they are run by the best-seasoned executive teams the industry has seen in years.

These are some of the observations made by the consultants behind Deloitte's ninth annual Technology Fast 50 ranking, which counted seven new arrivals in the top 10.

One of the most salient features of the list is that more than half of the companies are self-funded, receiving no venture capital support, says Chris Chapman, national business development leader of Deloitte's technology, media and telecom practice.

Venture capital (VC) firms have had trouble raising new pools of cash since the tech bust, and most are still holding investments made in the boom days.

"The VCs who pumped money into the industry between 1999 and 2001 probably didn't invest well," says John Ruffolo, national leader of Deloitte's technology, media and telecom practice.

The good news is that firms are starting to go public again and merger and acquisition activity is heating up, which should allow VCs to free up their cash and begin redeploying it into a new generation of startups soon. There are more IPOs in the wings than at any time since 2001, including four of the top five ranked firms, Mr. Ruffolo says.

DragonWave Inc. (No. 5) is considering an offering soon, possibly on the London Stock Exchange's junior AIM market. But a lot depends on how market conditions fare, a variable the company cannot control, says Peter Allen, president and chief executive officer of the Ottawa-based firm.

"A lot of companies used to go to Nasdaq, but the requirements have become so extreme that the operating costs of going to these markets is much, much higher," he says. "This has created a vacuum that is largely being filled by London."

Overseas markets, specifically AIM, offer a better opportunity for early stage companies, says Mr. Allen, whose company makes equipment for wireless broadband networks.

Deloitte's findings are supported by some leading venture capitalists, including David Ferguson, managing general partner of VenGrowth Private Equity Partners Inc., which has investments of $1.2-billion.

"As a nation, Canada is under-funded from a VC perspective, and it's exacerbated by the tech downturn," he says.

The level of Canadian VC investment today is down 75 per cent from the boom days of 2000, to about $1.7-billion from $5-billion. These conditions make it a great time to be investing from a value perspective but very difficult from the entrepreneur's end. VenGrowth has been investing steadily in tech since 2002, he says.

It's definitely become harder for early stage companies to find VC financing, agrees Minhas Mohamed, CEO of MMV Financial, but he says there's plenty available for later stage businesses. The Toronto-based VC firm has between $70-million (U.S.) and $80-million invested and put money into 30 companies last year, including Elluminate Inc. (No. 10), a Calgary software startup.

A shortage of funding has forced technology firms to manage what they have better. The Fast 50 tend to spend carefully and are managing their research and development budgets wisely, Mr. Ruffolo says.

One factor that is helping is a more seasoned and stable set of managers running firms than existed during the tech heydays. The average executive in the Deloitte survey has about 15 years of experience, compared with an industry norm of about 5 years in 2000, he says.

"You're not seeing people jump around from company to company as much any more," he says.

Another trend in the Fast 50 ranking this year is the emergence of Western Canada as a base of successful firms. Several companies from B.C. and Alberta that service the oil and gas industry or specialize in green technology made the list last year, and more were added this year. Vancouver-based Westport Innovations Inc., which makes engines that run on alternative fuels, has secured the No. 1 spot.

There is also a growing depth of technology in the west. Elluminate, for example, makes Web-based educational and distance-learning software. Universities and colleges around the world use the technology to connect remote students with faculty. "You can bring the class together and then break them into groups that work together on-line, while the professor watches," says Nashir Samanani, president, CEO and founder of Elluminate.

Deloitte says such companies as DragonWave and Elluminate have adopted a common strategy used by many of the Fast 50 firms. They look at major industries and find niche areas within them that have not been addressed by anyone else.

"Canadian companies have done a good job of identifying large markets with gaps in them. They've done a good job of deploying their products and getting blue chip customers," Mr. Chapman says.

Elluminate, for example, grew out of an early business developing Y2K software for Norton Antivirus, now owned by Symantec Corp. "We look for markets that are at an early stage, so we are best in class by the time we come to market," Mr. Samanani says.

DragonWave, meanwhile, has focused on technology that takes broadband wireless traffic from a string of connected cell sites and gets it back to the core of the network. The uniqueness lies in the wireless method the company uses to aggregate the various streams of traffic. The key for small companies entering an industry with large, well-established players is to be able to solve problems in a different way, Mr. Allen says.

This year's Fast 50, like previous versions, draws heavily on first-time rankings. Very few companies make the list several years in a row. In fact, only one player repeatedly makes the cut: Research In Motion has landed on the Fast 50 every year since Deloitte began the ranking.

Rutter Inc., of St. John's, Nfld., whose automation technology is used by oil and gas and other industries, has made the list the last three years, but its growth has been aided by acquisitions. Toronto-based Hydrogenics Corp., which makes clean energy technology, has made the list three times, but over five years.

The high turnover speaks to the nature of Canadian business, which is dominated by small firms growing quickly who find fast exits, whether through acquisition or IPO, Mr. Ruffolo says.

The Technology Fast 50 is compiled from both public and private firms that apply to be included. Those companies that are not willing to share financial data with Deloitte are removed. Among the criteria Deloitte sets: Firms must be in the software, hardware, telecom or emerging tech industries, they must have their head office in Canada, they need to have created their own intellectual property, and revenue must have exceeded $75,000 (Canadian) in 2001 and $5-million in 2005.

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The Deloitte Technology Fast 50

The 50 fastest-growing Canadian tech companies, based on overall revenue growth in teh past five years.

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RANK	COMPANY	LOCATION	FIVE-YEAR REVENUE GROWTH RATE (%)	SECTOR	PRODUCT / SERVICE
1	Westport Innovations Inc.	Vancouver	42,889	Emerging tech.	Engines, fuel systems
2	Redline Communications	Markham, Ont.	37,583	Telecom/wireless	Broadband wireless access
3	Airborne Entertainment Inc.	Montreal	33,322	Telecom	Entertainment for mobile devices
4	RuggedCom Inc.	Woodbridge, Ont.	20,545	Telecom	Rugged communications equipment
5	DragonWave Inc.	Kanata, Ont.	18,968	Telecom	Broadband wireless systems
6	Imaging Dynamics Co. Ltd.	Calgary	17,978	Hardware	Digital radiography systems
7	Tira Wireless	Toronto	11,538	Software	Wireless programs
8	Rutter Inc.	St. John's	7,936	Hardware	Marine technology, engineering
9	Digital Oilfield Inc.	Calgary	6,781	Software	Energy-sector integration
10	Elluminate Inc.	Calgary	5,046	Software	eLearning, Web collaboration
11	BTI Photonic Systems Inc.	Ottawa	3,394	Telecom	Optical metro edge networks
12	Solium Capital Inc.	Calgary	3,248	Software	Savings plans
13	N-able Technologies	Ottawa	3,123	Software	Performance management
14	Eloqua Corp.	Toronto	2,445	Software	Sales cycle acceleration
15	AirIQ Inc.	Pickering, Ont.	2,437	Telecom	Wireless fleet security
16	Digital Fairway Corp.	Toronto, Ont.	2,331	Software	Communications management
17	Upside Software Inc.	Edmonton	2,250	Software	Web-based contract management
18	Desire2Learn Inc.	Kitchener, Ont.	2,116	Software	Enterprise learning systems
19	QuestAir Technologies Inc.	Burnaby, B.C.	2,082	Emerging	Advanced gas purification systems
20	Workbrain Inc.	Toronto	1,753	Software	Workforce management
21	Radialpoint	Montreal	1,680	Software	Managed Internet services
22	CityXpress Corp.	Vancouver	1,577	Software	Products, programs for newspapers
23	WebTech Wireless Inc.	Burnaby, B.C.	1,379	Telecom	Wireless fleet management
24	Grey Island Systems Inc.	Toronto	1,210	Telecom	Wireless fleet, transit management
25	Oceanwide Inc.	Montreal	1,156	Software	Trade, cargo insurance
26	ESI Entertainment Systems	Burnaby, B.C.	1,130	Software	On-line gaming
27	DiagnoCure Inc.	Sainte-Foy, Que.	1,001	Software	Software for cancer detection
28	PointClickCare (Wescom Solutions)	Mississauga, Ont.	800	Software	Integrated long-term care solutions
29	Activplant Corp.	London, Ont.	798	Software	Management intelligence
30	Workstream	Ottawa	771	Software	Workforce management
31	Cogsdale Corp.	Charlottetown	749	Software	Solutions for governments, utilities
32	Frantic Films Corp.	Winnipeg	652	Software	Visual effects, computer animation
33	Nstein Technologies Inc.	Montreal	574	Software	Text mining
34	C-COM Satellite Systems Inc.	Ottawa	571	Telecom	Mobile satellite antenna systems
35	Evertz Technologies Ltd.	Burlington, Ont.	509	Hardware	HDTV, IPTV equipment
36	Phoenix Interactive Design	London, Ont.	474	Software	ATM operations
37	IP Applications Corp.	New Westminster, B.C.	454	Hardware	Outsourcing solutions
38	Chartwell Technology Inc.	Calgary	452	Software	Gaming systems
39	Digital Payment Technologies	Burnaby, B.C.	437	Hardware	Automated payment technology
40	zed.i solutions inc.	Calgary	427	Software	Well-monitoring instruments
41	Research In Motion	Waterloo, Ont.	377	Telecom	Wireless technologies
42	March Networks Corp.	Ottawa	373	Hardware	Digital video surveillance
43	Extreme CCTV Inc.	Burnaby, B.C.	367	Hardware	Specialty surveillance systems
44	Espial	Ottawa	331	Software	Application software for electronics
45	Intelerad Medical Systems	Montreal	307	Software	Digital diagnostic imaging solutions
46	Hydrogenics Corp.	Mississauga, Ont.	292	Emerging	Hydrogen, fuel-cell products
47	Genetec	Saint-Laurent, Que.	276	Software	Video surveillance, security solutions
48	Atlantis Systems Corp.	Brampton, Ont.	266	Software	Flight simulation trainers
49	Artificial Mind & Movement	Montreal	263	Software	Video game developer
50	Aastra Technologies Ltd.	Concord, Ont.	260	Hardware	Communication networks access

SOURCE: DELOITTE AND TOUCHE