Past is prologue for OttawaTech

I’m not saying we have the world beat in all these areas. But we have our oars in the water. And the fact is we can row with the best of them.

By Tony Patterson
From SCAN's Print Edition

“If things are so down,” Parking%202-310X131.jpgDenny Doyle’s calling from Kanata, “how come there’s no place to park.” He’s been circling the towers of Leggett Drive near the Brookstreet Hotel. This month his company, Doyletech, publishes the cause of all that congestion in the most recent update of his unique, much admired and much copied family tree of locally-generated technology companies. The original pre-1995 poster had a total of 127 boxes showing the genesis and evolution of companies in what was then becoming Silicon Valley North. About half were spinoffs from Nortel, the rest from government labs. I get eyestrain trying to count the number of boxes in this eighth edition, but it’s closer to two thousand than one. By all measures other than the feverish few years at the turn of the millennium, Ottawa’s tech sector is thriving. As Mr. Doyle says, “Sure, we don’t have as many big companies. But we have a lot of excellent small companies. The trick will be to grow them into real companies rather than branch plants. What the tree indicates is that our technology engine is working but our financing engine leaves a lot to be desired . . .”

The Doyletech family tree reinforces what we already know. There are more people working in the high tech sector here than ever before. There are more companies. There is much more diversity. No longer are all of our eggs in the telecom basket. There is a lot to shout about.

Jeffrey Dale, CEO of the Ottawa Centre for Research and Innovation (OCRI) is sure of it. He points the recent acquisitions that are extending the reach of local stars: Mitel-Intertel, Cognos-Applix, Corel-Intervideo, Zarlink-Legerity; the recent IPOs: Corel, Enablence, DragonWave; the job growth at Nortel, RIM and Dell. Dell has put a thousand support centre jobs here in the past few years and promises another thousand soon. Alright, these are McTech jobs but they remain a way in for many, a way back for some and a paycheque for anyone who really needs one.

Of the companies Mr. Dale mentions, DragonWave is on the Deloitte list of the 50 fastest growing Canadian technology firms. There are two others on the list. There are five local companies on a similar list from Deloitte of the fastest-growing wireless companies in North America.

Last year high tech employment rebounded to 78,000, according to Doyletech’s research, almost 7% above the previous peak reached in 2000, before the fallback, and advances continue this year. OCRI notes but it’s too infrequently remembered that Ottawa’s population is salted by the nation’s highest percentage of university grads and the highest concentration of PhDs in North America, tied with Boston.

I’ve been writing about technology in Canada for more than forty years and I’ve been working in the field for more than twenty. I think these present days are just a lull before the tsunami. We’re on the verge of the most spectacular technology boom the world has ever known.

I won’t try to define how it will proceed. Osama bin Laden could intervene and change priorities. It’s happened before. But I’m quite sure the future will be consumed by two enormous challenges that intertwine. The first is global warming and all of its environmental and energy-related consequences. The economic immensities that flow from this imperative boggle the mind. The second is the need to improve human connection and communication so that the global collaboration necessary to meet the first challenge becomes possible.
It may also be driven by the desire to explore space, perhaps indeed by the need to do so in order to provide an escape route if we and our descendants falter in meeting those challenges.

Cleantech, communications and space. Are these not areas where we have expertise and initiative? At a conference in Toronto early this month (November '07) a distinguished panel, including the CEO of the world's largest cleantech venture capital fund, picked the ten most outstanding corporations in Canada. Six of the ten are in Ottawa.

PlascoEnergy, which is turning waste into fuel for internal combustion engines, is the poster project for Sustainable Development Technology Canada (SDTC). CEO Rod Bryden hasn’t had much trouble raising money for Plasco. He’s found $50 million in the past couple of years and built the firm from virtually ground level to a $300 million market cap. It’s a sister company to Clearford Industries, with an original and much improved wastewater treatment system for municipalities. Iogen is here with its demo plant to create ethanol from cellulose, though being wooed by a US$80 million grant from the U.S. government to locate its first commercial distillery in Idaho. Ensyn, which holds patents on the core rapid thermal processing technology, has its largest biomass refinery in Renfrew, where it converts up to 200 green tons of wood per day into natural resin products, co-polymers, other chemicals, liquid fuel and green electricity. This is all of the essence of clean tech and it’s all reflective of what’s here. There are more than 120 companies in the Ottawa region that consider themselves primarily in the environmental space, or have products and services related to cleantech.

Cleantech is already making an impact where it counts most for most companies, on the balance sheet, by securing the backing of a government-funded ‘foundation’. SDTC’s capital base was doubled in the last federal budget to a billion dollars, which makes it the biggest clean tech fund in the world. It’s all available for Canadians with a better idea for cleaning or preventing pollution or for producing cleaner energy. At a time when conventional venture capital has dried to a trickle in Ottawa’s high tech sector, the SDTC fund looks to be the best bet in town. In the five years since its founding it has completed nine funding rounds and allocated a total of $241 million to 109 projects. Nine of them are in Ottawa, more than any other municipality in the country (if you don’t count satellite communities such as Mississauga and Markham as part of Toronto, which on its own has only two such projects).

Space business? Neptec is a prime contractor designing and building smart sensor systems for NASA's space program. The Shirley’s Bay campus of the Communications Research Centre has been home and support to development teams for the famed Alouette, the first of which makes Canada the third country with a satellite in space and operates for ten years setting several space records, Hermes, Black Brant, ISIS, ANIK, MSAT, RADARSAT. They all owe debts to CRC, which is still home to the David Florida Lab of the Canadian Space Agency (CSA).

From satellite antenna systems (C-COM, riding from success to success through twelve consecutive profitable quarters) to solutions that enhance the reliability of information transmission (International Datacasting, which has just closed a secondary offering around $10 million), to space optics (ComDev has begun work on a $39 million CSA contract to produce a fine guidance sensor that has been booked aboard the James Webb Space Telescope, touted as the successor to Hubble), Ottawa has scientific and marketing smarts that will keep us in the space race.

Communications may have lost a touch of lustre but there’s no gainsaying that Nortel is still standing after repeated blows and is still a power to be reckoned with. It has hired a thousand engineers in the past year, a quarter of them here. If it reads the market correctly, and it has done so more often in the past than most of its competitors, it will rise again and draw many along with it. In the meantime, the hundreds of entrepreneurial ventures spun out of the millennial collapse are throwing up more winners all the time. As social intercourse continues to gain on the other kind, companies such as Iotum, Jaded Pixel, TalkSwitch, PIKA, and Parliant in Almonte, are poised already on Web2 and looking toward Web3.

All the while these are pursuing their objectives, they will be protected by enhanced defence and security systems, and guess what? Ottawa is pretty advanced at designing, producing and selling just such systems, from the ones that recognize you by your eyeball to the ones that trap computer threats and the ones that defuse bombs. Did you hear the recent news that Canada is the world’s sixth largest exporter of weapons? (Defence equipment, surely. I recall a meeting with the DM of International Trade when discussion turned to the difference between an offensive and a defensive weapon. The DM asserted that weapons are defensive in Canada’s view if they are stuck in place. They are offensive when mounted on a carriage.)

It’s a hot market. The biggest domestic customer, the military, is here. Military aides from other countries are here, in the various embassies and high commissions. And industry is here, big time. There are more than 300 companies on OCRI’s Security Cluster roster.

I’m not saying we have the world beat in all these areas. But we have our oars in the water. And the fact is we can row with the best of them.

We have the experience and the culture. Sure we were hard hit by the meltdown, but we’re coming back. For a few years Ottawa was a global hot spot for technology. There aren’t many cities in the world that have ever achieved that. If you except Toronto, which I’m always willing to do (with permission since I’m one of the minority born there), no other city in Canada has even come close.

Moreover Ottawa is as entrepreneurial as it gets, at least in this country. I don’t believe that we’re depressed, oppressed, suppressed or anything but pressed on by the public servants we live among (and they among us). It’s a government town. How can a national capital be anything else? But unless one hates government on principle it’s hard to escape the fact that science and technology writ large in Canada is mainly funded by the federal government. The fact that we’re in the technology sector in this government town, with its funding agencies, research institutes and S&T mandarins all at hand, is a godsend.

And the next time you’re tempted to slag the bureaucrats you might reflect on David Luxton, who pulled off the deal of the year this fall by merging Allen-Vanguard with MedEng. He was once one of them. Leonard Lee, founder of Lee Valley Tools and now on to a new enterprise developing surgical instruments, was a public servant for years. Rod Bryden got to be a deputy minister before leaving to start Systemhouse and a career of serial entrepreneurship.

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