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Over the past few months, a relatively unknown player has been sprinkling seed money on a growing number of startups, providing the ecosystem with a source of much-needed capital.

So what is FedDev Ontario and why the flurry of investments?

FedDev is a federal agency created in 2009 to support the southern Ontario economy to "mitigate and overcome economic challenges, as well as position the region to compete globally."

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Translation: It is looking to jump-start economic development and create jobs.

Well, that certainly sounds ambitious, doesn't it?

So why the focus on startups, which tend to be risky ventures that could support economic development but could also flame out after a short time?

To get the scoop on FedDev, I asked a few questions to FedDev spokesman Kevin Miller.

Q: What role does FedDev Ontario play within the investment and startup ecosystem?

A: Consultations with stakeholders in southern Ontario after the launch of the agency revealed the business community faces real challenges when it comes to productivity, competition and innovation. In particular, startup companies lack access to capital and investors to help them bring promising ideas and innovations into the market.

Through Investing in Business Innovation, FedDev Ontario is focusing on early-stage businesses that are recognized as having the potential for high growth and a net long-term economic benefit for southern Ontario. IBI also provides funding to help angel organizations attract new investors and encourage the growth of angel investment funds.

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Q: Who's eligible for the program and how does FedDev Ontario decide who gets money?

A: Eligible recipients under this initiative are startup businesses, defined as companies with less than 50 employees, not-for-profit angel investor networks, and not-for-profit organizations representing angel investor networks. FedDev Ontario assesses applications based on specific criteria, as outlined in the program guidelines.

Q: What's the range of investment made by FedDev Ontario in a particular company?

A: Startups in southern Ontario may request up to $1-million in repayable contributions. Angel investor network applicants may request one-time, non-repayable funding of up to $50,000 to help them attract new investors. Organizations representing southern Ontario angel networks may request non-repayable funding of up to $2-million to support investment attraction and other development activities.

Q: Are there any limitations on how the money can be spent or when it needs to be spent?

A: Funding needs to be spent by March 31, 2014.

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Q: Are all contributions repayable?

A: Contributions to startup companies are repayable. Contributions to not-for-profit angel investor networks and organizations representing southern Ontario angel networks are non-repayable.

Q: How many companies have received financing so far?

A: To date, FedDev Ontario has announced investment in funding for projects with the following organizations: Powernoodle, Nulogy, Guardly, Miovision Technologies, Maintenance Assistant Inc., Chango Inc., Wave Accounting Inc., gShift Labs Inc., Ultimate Kiosk Inc. and the Niagara Angel Network.

Q: How big is the program and how long will it last?

A: FedDev Ontario has notionally allocated up to $190-million until March 31, 2014 for Investing in Business Innovation. However, all project activities must be completed by that date.

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Special to The Globe and Mail

Mark Evans is the principal with ME Consulting, a communications and marketing strategic consultancy that works with startups and fast-growing companies to create compelling and effective messaging to drive their sales and marketing activities. Mark has worked with four startups – Blanketware, b5Media, PlanetEye and Sysomos. He was a technology reporter for more than a decade with The Globe and Mail, Bloomberg News and the Financial Post. Mark is also one of the co-organizers of the mesh, meshmarketing and meshwest conferences.

Join The Globe's Small Business LinkedIn group to network with other entrepreneurs and to discuss topical issues: http://linkd.in/jWWdzT







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