From the day in 1857 when Queen Victoria selected Ottawa as the capital of the united colonies of Upper and Lower Canada, the city was destined to be a government town.

However, entrepreneurship has always been a key driver of its economy. As early as 1875, a young telegraph operator from LeBreton Flats by the name of Thomas Ahearn was familiarizing himself with the details of Alexander Graham Bell's experiments, which were published in Scientific American. In 1879, he was placed in charge of Bell's Ottawa office, a very prestigious position at the time.

In 1888, he got the contract to construct and operate Ottawa's first electric railway system, teaming up with Warren Soper to carry out the project. During the next 20 years, they developed all kinds of electricity-based products, including the electric kettle, and the names Ahearn and Soper became associated with entrepreneurship to almost the same extent as the names Matthews and Cowpland would be associated with it a century later.

Several Ottawa business leaders who had made money in the lumber industry financed their initiatives.That trend of recycling old money into the new economy has continued to this day in Ottawa.

In the 1940s, it was Peter Mahoney bankrolling George Glinski and Joe Norton to start Computing Devices of Canada Ltd. and in the 1960s it was Findlays of Carleton Place doing the same for Leigh Instruments. In the 1970s, the principals of the Maclaren Power and Paper Company invested in companies such as Lumonics, DY-4, Cognos and Mitel.

The Maclaren activity led to the creation of a venture capital company that became Noranda Enterprise Ltd. when Noranda took over the ownership of Maclaren. Unfortunately, a change of corporate direction in Noranda in the 1980s resulted in the closure of Noranda Enterprise.

In the early 1990s, Richard Charlebois, a former co-manager of Noranda, and I formed Capital Alliance Ventures Inc., a labour-sponsored venture capital fund. We felt strongly that a city such as Ottawa, with all of the entrepreneurial activity that was going on at the time, should have a venture capital company of its own. We also felt that a local company would act as a catalyst in bringing other venture capital companies to town. Whether we can claim credit for all of the current activity in the city is questionable, but it is gratifying to see about 15 venture capital offices now operating here. They are making investments in companies such as SiGe, Symagery, Biodentity and Critical Telecom, none of which have yet become household names as have Corel, Cognos or Mitel.

Even though Ottawa's high-technology employment has fallen from about 75,000 in 2000 to about 57,000 today, the number of companies has increased from about 1,350 to about 1,600 during that same period. There is obviously a lot of incubation going on, probably more than at any time in the city's history.

Unfortunately, the past four years have not been kind to the venture capital industry, not just in Ottawa, but throughout North America. Venture capitalists make their money by selling their equity positions to buyers such as the public through initial public offerings (IPOs), to corporate management teams and to other companies. The downturn in the public markets, particularly in the high-technology sector, has impacted heavily on all of the above exit options.

By Denzil Doyle,

Capital Alliance Ventures Inc.