The Ottawa venture capital market, after collapsing last spring, has enjoyed a flurry of deals in the past month worth more than $170-million.
"Tech is not dead in Ottawa," said Chris Egner, in charge of sales and business development at BTI Photonics Inc., which is slated to announce a second round of financing totalling $10.4-million (U.S.) today.
Shaken by the implosion in the telecommunications market, the Ottawa venture capital scene experienced a marked decline in the second and third quarters last year, said Kirk Falconer, research director at Macdonald & Associates Ltd., which follows the industry.
Last year began with a financing bang, Mr. Falconer said. Adding to the record $1.4-billion (Canadian) raised in 2000 and $1.3-billion in 2001, the first quarter of 2002 saw Ottawa companies attract $375-million in venture capital. Then the money dried up. Only $29-million was raised in the second quarter and $86-million in the third quarter.
Yesterday, the Ottawa Centre for Research and Development said companies in the capital attracted about $200-million in the fourth quarter.
Mr. Falconer said the Ottawa market, which is focused mainly on telecom and related information technology, is on a "slow rebuild."
Patrick DiPietro, a partner at VenGrowth Capital Partners Inc., said 2002 was a year "people were afraid to move quickly."
Mr. DiPietro, who led the BTI financing, said he sees some modest momentum building, even for companies involved in the hard-hit optical networking business. The optical sector suffers from a surplus of equipment on the market and a surplus of companies trying to sell their wares.
"It's kind of bold to do an optical play right now -- but BTI's in the right spot," Mr. DiPietro said.
BTI makes what is known as a subsystem, named the "optical link system," a product that is a couple of weeks away from its commercial debut. BTI's link connects two terminal points on an optical network, ensuring that the light waves travelling over optical fibre arrive at their destination in the same condition in which they were sent.
The advantage, Mr. DiPietro said, is that BTI's link can connect different pieces of terminal equipment, whether it's made by Nortel Networks Corp. or Lucent Technologies Inc. or others. Until now, if a phone company or other customers used a variety of optical terminal equipment, the network's overall quality wasn't perfect because all the equipment didn't communicate perfectly.
"Our system is a totally different way to do links," said Mr. Egner of BTI. He said BTI hopes to sell its product to equipment makers like Nortel Networks and Lucent Technologies.