Posted by Tyler Hamilton
I got my start in mainstream journalism as a technology and telecommunications reporter for the Globe and Mail, a beat I later took on at the Toronto Star and covered for six years before switching to energy. When I first started we were still using the term “information highway” to describe the coming convergence between the telephone and cable companies. Cable companies in Canada had their own networks, their own turfs, and their own regulated monopolies, while the phone companies had the same. The turfs overlapped, but the products and services stayed largely separate. You got cable from the cable guys, and phone service from the phone guys. The information highway threatened to change that, allowing the phone and cable guys to invade each other’s turf and bust through their respective monopolies.
The commercial Internet was still in its infancy and was considered part of the information highway. It was only in the mid-1990s that the Internet emerged as the dominant disruptive force in this technological vision. Internet Protocol, the communications standard underpinning the Internet, allowed all sorts of information — text, audio, video — to be treated as packets of data that could be shipped at high speed across cable and phone networks, which were privately operated networks that had on-ramps and off-ramps to the public Internet. As networks became faster, as compression of data got better, as computing power and memory grew exponentially, it became technologically possible and economical to deliver phone, broadcast, e-commerce, Web surfing and e-mail over both the cable and phone networks. The result: network convergence. Suddenly technology was creating competition in these regulated monopolies, forcing regulators to adapt and establish rules that permitted regulatory forbearance when competition in a market was deemed acceptable. For the phone and cable companies, the gloves were off. It was game on.
Why am I telling you this? Because I’m seeing the same thing happening in the energy sector. Electric utilities and natural gas utilities — in Canada at least — have operated in largely different worlds, each with their own rules and regulations, each with their own regulated monopolies and turfs. Actually, that isn’t entirely the truth. The electric utilities still offer electric hot-water tanks and electric heating, though this is slowly being phased out. But on the natural gas side, offering electricity directly to residential customers just hasn’t happened. Sure, in some jurisdictions there are parent companies that own both a natural gas utility and electric utility and offer services to customers on the same bill. But that’s not the convergence I’m talking about. I’m talking about using a natural gas pipeline network as direct competition against an electric transmission and distribution network.
I got thinking about this more after Bloom Energy announced its Bloom Energy Server (a couple of movers are handling one in the picture at right). As far as technology goes, I didn’t see this unveiling as a big deal. Solid-oxide fuel cells have been around for decades. Today, there are several companies working on the same thing. What Bloom comes to the party with is good marketing, high-profile financial backing, and a great vision.

March 07, 2010 07:35 AM     More     Comments (0)    

Posted by Tyler Hamilton
I reported Tuesday that Bosch Solar, a subsidiary of German conglomerate Bosch Group, had signed a deal with Calgary-based solar inverter maker Sustainable Energy Technologies that will see the firms integrate their respective products to create a kind of all-in-one solar package for the Ontario market. Sustainable Energy’s parallel inverter product, Paralex, would be integrated with Bosch’s micromorph thin film solar modules along with all necessary wiring. This would make it relatively easy for any contractor or home builder to install the systems without the need for specialized help. The companies hope this combination will distinguish themselves in an increasingly competitive market.
Sustainable Energy says it plans to move R&D and its inverter manufacturing to Ontario, where a feed-in-tariff program has lured many companies, including Korea’s Samsung, Chinese-focused Canadian Solar and India’s Solar Semiconductor. Denmark’s Vestas is also seriously eyeing Ontario’s offshore wind market.
If Sustainable Energy and Bosch follow through with these plans, it’s likely that Bosch will have to establish some sort of manufacturing footprint in Ontario. Not to produce the thin-film cells, but rather to do module encapsulation. Together, both companies could create several hundred direct jobs, but Bosch’s manufacturing presence would likely be minimal.
What’s unclear is whether Bosch sees Ontario as a launchpad to the United States. Sustainable Energy has indicated that it does, but Bosch has kept relatively quiet and, in all likelihood, if it was to pursue the California market it’s likely to set up assembly facilities there. And like most of the “deals” announced around manufacturing in Ontario, most of this is just talk so far. Samsung has a comprehensive framework agreement with the province, so it appears to be the real deal. The rest are just testing the waters, trying to get a sense of whether they can negotiate more from the Ontario government beyond the generous feed-in-tariffs being offered today. Whether the province is willing to step up with tax breaks and loan guarantees — that’s unclear. But until we get that clarity, most of what we’re hearing is nothing more than noise.

March 05, 2010 07:35 AM          Comments (0)    

Posted by Michael Geist
Today's Speech from the Throne, which sets out the government's agenda for coming Parliamentary session, includes a considerable number of digital issues. These include:
a digital economy strategy: "a digital economy strategy to drive the adoption of new technology across the economy"
copyright reform: "to encourage new ideas and protect the rights of Canadians whose research, development and artistic creativity contribute to Canada’s prosperity, our Government will also strengthen laws governing intellectual property and copyright."
open telecom to foreign investment: "open Canada’s doors further to venture capital and to foreign investment in key sectors, including the satellite and telecommunications industries"
lawful access: "introduce legislation to give police investigative powers for the twenty-first century."
cybersecurity: "working with provinces, territories and the private sector, our Government will implement a cyber-security strategy to protect our digital infrastructure."

March 03, 2010 10:42 PM          Comments (0)    

Posted by Tyler Hamilton
My story in today’s Toronto Star is about a new industrial efficiency program that will soon be unveiled by the Ontario Power Authority. Under the plan, the province will agree to pay up to 70 per cent of the cost of an industrial energy retrofit, making it possible for the industrial energy user to achieve up to 30 per cent energy savings and a one- to two-year payback on investment. The aim is to get 300 MW of savings initially. The province’s contribution to each project is capped at $10 million. While giving away millions to help industry use less energy would seem misguided, it’s in fact a very smart and effective strategy. The money being paid out will be much less than what it would cost to built a 300 megawatt power plant. Meanwhile, helping key industrial players become more efficient makes the Ontario economy more competitive and insulates these industrial operations — and the jobs they create — from economic downturns.
Roughly 50 to 60 big industrial players that connect directly to the province’s transmission system can participate in the program, which was spearheaded by international mining companies XStrata and Vale Inco, as well a steel giant ArcelorMittal Dofasco. The three companies, which formed a working committee that reported to the power authority, estimated that efficiency gains could “realistically” achieve 1,000 megawatts over five years.
Industrial efficiency might not be as sexy as solar and wind — actually, it’s definitely not as sexy — but the simple fact is that the greenest and cheapest megawatt is the one that isn’t used. This is a smart program. Oh yeah, and we shouldn’t forget the stimulus effect. These projects will create much-needed jobs over the next few years.

March 03, 2010 10:28 PM          Comments (0)    

Posted by Mark McQueen, CEO Wellington Financial LP
“The government’s Ontario Venture Capital Program is a bust” — Peter Shurman, MPP
It has been a few days since representatives from the Canadian Venture Capital & Private Equity Association trooped up to present to the Finance Committee at Queen’s Park, but the sorry state of start-up and venture capital in Ontario finally appears to be sinking in with members of the Provincial Legislature (see prior post Ontario Finance Committee appearance, Feb 1-10).
According to the <Thomson/ CVCA 2009 stats, of the $1 billion in new venture capital dollars invested nationally last year, a total of “$431 million was invested in Québec, up 10% from the $392 million invested in 2008, giving it a leading 43% share of the Canadian total last year. Deal activity in Ontario fell in both absolute and relative terms, with $288 million invested in 2009, or 50% below the $575 million of one year ago. As a result, Ontario accounted for only 28% of all disbursements nationwide, which is its lowest market share since the early 1990s.”
During yesterday’s Question Period, Progressive Conservative Economic Development Critic Peter Shurman asked Research and Innovation Minister John Milloy about “Liberal failures on venture capital”.
Mr. Shurman asked Minister Milloy “to admit that their venture capital program is an abysmal failure. The government’s Ontario Venture Capital Program is a bust. Despite set-up and operational costs that must run into the hundreds of thousands of dollars, no funds have actually flowed from the three commitments made to date. That means that not a single job has been created by this program since it was set up over two years ago.”
Tough stuff, and echos concerns you’ve heard raised earlier in certain quarters (see prior representative post UAE’s Sheikh Khalifa Fund vs. Ontario’s OVCF, Jan 10-10).
According to a press release issued by Mr. Shurman’s office, Minister Milloy “could not explain why investment in Ontario from venture capital funds had fallen from $1.5 billion in 2000 to just $88 million in 2008.”
In Mr. Shurman’s eyes, the Ontario government’s 2005 decision to kill the Labour Sponsored Fund Program is to blame:
“It is clear that governments in the rest of Canada understand what it takes to attract job-creating investment to their provinces. The McGuinty government’s bad decision in 2005 to phase out tax credits for venture capital funds has come back to haunt them. The failure of the Ontario Venture Capital Fund is further evidence that the McGuinty Liberals are disconnected from reality when it comes to venture capital.”
In the last few days, the folks at the Ontario Venture Capital Fund have started a new marketing effort, sending out a blast email and newsletter outlining the four “commitments” they’ve made to Canadian-based VC funds since the OVCF was launched in June 2007. On the NorthLeaf website, they’re referred to as “investments”…which would be true once they all have a first close.
The good news is that one of these commitments has actually closed, with the US$67 million first close of XPV Water Fund. OVCF is a “lead investor” in the fund, with a C$20 million commitment.
This is a wonderful development for the XPV team, and their defined business model was understandably welcomed by the institutional investor community. The other three $20MM commitments from OVCF that are still in fund marketing mode include: Edgestone Venture Fund III, Georgian Partners Fund I and Lumira Capital II. There’s still not been any public acknowledgement by OVCF manager NorthLeaf of the rumoured early commitment to the USA-based Mayfield Fund, for example (see prior post “Did the Ontario Venture Fund finally pull the trigger?” Mar 16-09); maybe it never happened.
The other bit of good news is that OVCF will now sign up on less than $100 million of commitments for the first close. For the last couple of years, it had been understood that if you didn’t get to $100 million, there would be no fund. XPV’s US$67 million first close demonstrates that this $100MM mendoza line is no longer the case — if it ever was at play.
Congrats to the team at XPV! Hopefully this is the first of several fund closings that we’ll see as the year progresses.
The $20MM close for Mantella Venture Partners is one more step in the right direction, thanks to the hard work of Robin Axon and Duncan Hill and the confidence of their LP Mantella Corp (hat tip Start Up North).
Sadly, these two bits of great news don’t undercut the concerns raised by Mr. Shurman regarding Ontario’s shrinking role in Canada’s Innovation landscape. Even if both new funds put out every dollar they’ve raised tomorrow, and only in Ontario-based deals (which seems unlikely as XPV’s fund is in U.S. dollars), the Province still punches below its weight.
(disclosure - although I am a Director of the CVCA, these views are my own)

March 02, 2010 09:19 PM          Comments (0)    

Posted by Alec Saunders
Venture Capital in Canada is in a dismal state of disarray. With activity at a 14 year low, investment companies have evaporated and funds are simply not being raised. Moreover, despite a resurgence of interest among angel investors, the institutional capital markets don’t show any sign of improving soon. One angel I spoke with last week opined that series A investments for his companies were most likely to come from Boston or the San Jose / Palo Alto / San Francisco than Toronto.
US Senators John Kerry and Richard Lugar [have] introduced The Startup Visa Act which, if passed, will almost certainly accelerate that trend.
Similar legislation has also been introduced in the US house of representatives by Colorado’s Jared Polis. Supported by more than 100 US vc’s and angel investors, the legislation would grant special visas to entrepreneurs with at least $100,000 from a sponsoring US investor in an equity financing of not less than $250,000. If after two years, the business has created 5 jobs and raised an additional $1,000,000, then the entrepreneur is entitled to permanent residency.
Many countries have immigrant investor legislation, including Canada. The legislation usually requires that an immigrant entrepreneur have a minimum net worth, and agrees to set up a business in the host country. The Kerry-Lugar legislation is the the first that I’m aware of that allows an investor in the host country to essentially sponsor the immigrant. That’s an important and useful innovation. Moreover, the funding requirements are tiny by US investment standards, allowing US investors to cherry-pick the best new businesses from around the world and bring them to the United States.
Will this new process result in a flight of Canadian entrepreneurs to Silicon Valley? It certainly seems likely, but only time will tell.

March 02, 2010 07:23 AM          Comments (0)    

Posted by Alec Saunders
“I think you’re over-intellectualizing this, John*. Being an entrepreneur isn’t a risk/reward conversation, otherwise nobody would ever do it.” Thus spake the “sage” of Ottawa, midway through a conversation with a close friend who’s thinking about striking out on his own after a lengthy career within one of the Fortune 500. Somehow we had started talking about return on investment as it relates to startups, compared to continuing to be a working stiff in the corporate world.
Starting a business is a gutsy, and some might say foolish, exercise. Your business is going to take longer to get off the ground than you ever imagined (Calliflower has taken nearly seven years!). You’re going to spend way more money than you ever expected. You’re going to earn far less than you “need” to live on. You will likely bring on investors who will have strong views on your business that you may, or may not, agree with. You will work more hours than you have ever done before. And worst of all, you’ll spend more time working in the business – doing the accounting, cleaning, running servers and so on – than you ever anticipated and it will frustrate the heck out of you because you can see the forest for the trees. It’s just that all those bloody trees are in the way…
And yet there is also:
the incredible team that you’re going to build as you build your company.
the joy of bringing a new product to market – the inspiration, perspiration, and perseverance that culiminates in a launch.
the undeniable thrill of customers – the people who part with their hard earned dollars to buy the product or service that you’ve built; the ones who are passionate enough once they’ve tried your product to tell you and your team what’s good, bad, great, or indifferent about your baby; and those rare individuals who go out of their way to tell the world that what you all have done is great.
the faith that family and friends have in you, and the responsibility that you have when they entrust even a portion of their savings to you and your new business.
the immense opportunity to learn new things. I guarantee you, and everyone working on the business with you, will learn faster in this “job” than you’ve ever learned before.
the network of mentors, advisors and friendships that you will build who are all rooting for this business and every other business you may build in the future.
And maybe, just maybe, at the end of it all you’ll make money out of this incredible life experience. You tell me – what’s the ROI on that kind of experience?
I’m not even going to try to guess.

*not his real name.

March 01, 2010 12:15 AM          Comments (0)    

Posted by Michael Geist
Each April, the United States issues the Special 301 Report, which examines the intellectual property laws of its main trading partners. For the past 15 years, Canada has been included on the watch list of countries the U.S. believes need reform. As the U.S. prepares its 2010 edition, for the first time it invited the public to provide their comments on the process and the link between intellectual property and trade policy. My weekly technology law column (Toronto Star version, homepage version) notes that among the hundreds of submissions, one from the Computer and Communications Industry Association stands out as critically important to Canada.
The CCIA represents a who's who of the technology business world, with a membership roster that includes Microsoft, Google, T-Mobile, Fujitsu, AMD, eBay, Intuit, Oracle, and Yahoo. While critics of Canadian policy might expect these business heavyweights to chime in with their own criticisms, they took the opposite approach.
Rather than building on the tired narrative that the current law is an embarrassment, the message from the technology world was that Canada is actually doing just fine. The CCIA warned that including Canada on the list of countries that need reforms undermines the credibility of the process, adding "Canada's current copyright law and practice clearly satisfy the statutory 'adequate and effective' standard. Indeed, in a number respects, Canada's laws are more protective of creators than those of the United States.”
The CCIA based its conclusion on four main criteria. First, it challenged claims that Canada's delayed implementation of the World Intellectual Property Organization's Internet treaties are grounds for inclusion on the list, stating there is "no basis for USTR to conclude that any country does not provide adequate and effective protection based on non-ratification of any treaty." Moreover, given that the majority of the world has yet to ratify the treaties, the CCIA noted that watch-listing one nation for non-ratification would seem to require watch-listing everyone that finds themselves in the same position.
Second, it disputed the oft-repeated claim that the absence of legal protection for digital locks — known as anti-circumvention legislation — should be the basis for watch-list placement. In fact, the very companies that are called upon to develop products compliant with digital lock systems argue that "neither Canada nor any other country is required to implement any particular means of preventing copying, and most assuredly not a right once removed from copying: circumventing a technological lock."
Third, the CCIA challenged claims that the Canadian approach to Internet provider liability for alleged infringements of their subscribers is sub-standard when compared to the United States. The Canadian approach is described as "thoughtful" and "potentially superior" and the submission maintains that using the Special 301 process to pressure other countries to adhere to U.S. standards is inappropriate, emphatically stating that the process "is not a vehicle to remake the world in the image of the U.S. Digital Millennium Copyright Act."
Fourth, it reminded officials that Canadian copyright law is more protective of creators than the U.S. in some respects, including the existence of moral rights and the limitations of fair dealing when compared to the U.S. fair use provision.
The defence is precisely the kind of response that Canadian officials should be making when confronted with unfounded claims denigrating the state of Canadian copyright law. That the world's leading technology companies are speaking out on this issue should send a strong signal to Industry Minister Tony Clement and Canadian Heritage Minister James Moore about how Canadian law is actually viewed by leading companies that sit at the heart of a Canadian digital strategy.

February 26, 2010 07:15 AM          Comments (0)    

Posted by Tyler Hamilton
Kudos to Vincent Chornet (right). The president, CEO and co-founder of Montreal-based Enerkem (along with his father, Esteban) has in just a few years turned his company into a leading player in the emerging waste-to-fuel market. Today, Enerkem gained even more momentum, announcing it had secured $53.8 million in venture financing in a round that included Houston-based Waste Management, the continent’s top waste-management firm.
Enerkem uses a thermochemical fluidized-bed process to gasify municipal solid waste (organics, wood waste, plastics), demolition wood, and agricultural/forest residues. The resulting syngas is cleaned and, using a proven catalyst, can be turned into a variety of end products, including methanol, ethanol and high-value olefins (plastics). The company is in the process of building a waste-to-ethanol facility in Mississippi (75 million litres a year) and an Edmonton plant (36 million litres a year) that will also turn sorted municipal solid waste into ethanol. The Edmonton facility is being done in partnership with Greenfield Ethanol, Canada’s largest independent ethanol producer. Meanwhile, in Westbury, Quebec, the company has a commercial-scale demonstration facility that currently turns old wooden hydro poles into ethanol.
Rho Ventures, Braemar Energy Ventures and BDR Capital, all existing investors, participated in the financing round with Waste Management, along with new investor Cycle Capital. “This financing round validates Enerkem’s business and advances our path towards leadership in the waste and advanced fuels markets,” said Chornet in a release. In an earlier story (July 2008) I wrote for Greentech Media, Chornet said that burning waste or burning the syngas created from waste is, well, a waste. Based on electricity and ethanol prices at the time, a company can make three times more revenue per tonne of processed waste compared to a plant that simply burns its syngas to generate electricity, he said. Chornet also said Enerkem’s process is profitable with oil at $50 a barrel and if the company can get a competitive tipping fee to take the garbage.

February 26, 2010 12:11 AM          Comments (0)    

Posted by Mark McQueen, CEO Wellington Financial LP
Let’s face it, visitng Spain is probably more fun than snowy Virginia this week, but you go wherever the deals take you in our business.
In the meantime, thanks to the good work at
Genuity Capital Markets, we have been able to stay on top of this year’s hot developments — and hotter promises — in the mobile space. Here’s their summary note on 3GSM:
More about positioning than innovation – Last week we attended the Mobile World Congress (MWC) show in Barcelona, Spain. While the show was better attended than last year’s event, we believe the pace of innovation has slowed somewhat. Given the hyper-speed at which the industry has been evolving, there was not much that was particularly new. However, we feel the industry is at a point where the major players are trying to strengthen their positions, or reposition (in the case of Microsoft).
OS landscape is fragmenting; Developer mindshare is narrowing – Much of the disruption and innovation is coming from the software side, specifically from players Google and Apple. The influence of Google with Android over the industry, especially considering its relatively short tenure, cannot be underestimated. However, instead of consolidating the platforms/operating systems, the new entrants – at least initially – are causing the landscape to fragment as new and old vendors try to stake their claim to the market. We can now count at least nine mobile operating systems in the market. That said, we found that developer mindshare is narrowing to Apple’s iPhone, RIM’s BlackBerry and Google’s Android. Developers are taking a “wait and see” approach with Microsoft’s new Windows Mobile 7.

February 25, 2010 07:15 PM     More     Comments (0)    

By Tony Patterson

One of the chicks hatched out of the federal science and innovation strategy cracked its shell today. Let out a peep.
GreenCentre Canada has given $25,000 each to two researchers in the Maritimes, who will get the money to advance their work in superconducting polymers (Andrew Grant of Mount Allison U. in Sackville, NB) and ionic liquids (Robert Singer of St. Mary’s U. in Halifax).
Not much, of course, as these things go, $25K. Grants in the hundreds of thousands and even millions to university research are not uncommon. These are so-called POP (proof of principle) grants, which tend to come in low. We don’t have much of a record yet out of Green Centre, so it’s hard to say what’s going to be normal granting practice.
GreenCentre is part of a new crop of federally-funded helping agencies called Centres of Excellence for Commercialization and Research (CECR). There are 17 of them, none much more than two years old (Green Centre hasn’t yet reached its first birthday). Between them they split about $225 million of federal funds. Green Centre in Kingston is actually a runt in the litter, given just $9 million to play with. Most of the others got $15 million.
But Green Centre is the first CECR to be in touch. It’s the first to tell SCANsite what it’s up to.
Why is this remarkable?

February 24, 2010 07:15 PM     More     Comments (0)    

Posted by Tyler Hamilton
Car-share services across North America are proving they’re not a passing fad as a growing percentage of urban dwellers — facing high parking prices, a lack of spaces, urban congestion and urban smog, not to mention higher fuel prices — are choosing to not own vehicles. Research firm Frost & Sullivan predicts car-sharing membership will grow eightfold between now and 2016, when North American membership is expected to reach 4.4 million. This represents a car-share fleet of 70,000 vehicles. Since every car-share vehicle is estimated to replace 15 cars on the road, this works out to about a million fewer cars on the streets by 2016. It’s a trend that automakers can’t ignore, according to Frost, which predicts car sales will be affected over the long term.
I’ve got a weekend feature in the Toronto Star that takes a closer look at car-sharing in Toronto, where two services — Zipcar and AutoShare — currently compete. I’ve also got a short story on a new car-share service starting out in Baltimore called RelayRides, which pegs itself as the first peer-to-peer car-share service in North America. Instead of owning its own fleet, RelayRides enables anyone who owns a car to sign up and make their vehicles available for short-term rental by other members of the public. It’s an interesting model that, while full of risks and very tricky to implement, could work in certain markets.

February 23, 2010 05:56 PM          Comments (0)