It is once again time to take stock of Ottawa's leading startups.
The OBJ presents 12 local firms that we have chosen as our Startups to Watch from the recommendations of those in the know.
Staff reporter Scott Taylor and regular contributor Jeff Pappone have looked under the hood to see what makes each company tick and why it stands out among the hundreds of early-stage companies across the city.
Some, like Iotum Corp., have till now been keeping a low profile, while others have already made a splash with big investor interest or contract announcements, such as Triacta Power Technologies Inc. of Almonte.
The 2005 edition of Startups to Watch comes at a time when ripples of anticipation have begun to sweep the region that a rebirth of the tech sector is at hand. A diverse host of small- to mid-sized companies have been expanding staff and signing up customers, suggesting the next boom will be far more sane and sustainable than the last.
However, that optimism has been tempered with a note of caution. Early-stage seed financing has dwindled, the legacy of the last tech bust that burned so many investors. Experts warn that many promising startups will flounder and die despite a solid business plan and strong market demand for their products.
Only time will tell which ones manage to survive and prosper in this lean and mean environment. In the fall, we will check back with our 12 startups to see how they have fared over the year.
Cyrium Technologies Inc.
Founded 2003
Employees: 5
VC to Date: More than $1 million
"The industry averages about a 2.5 per cent increase in power, but we can give it a huge increase. It will change the landscape of the industry." – Simon Fafard, CEO
He claims he can do it, this native of Drummondville, Que., who may just be on the cusp of something big. Cyrium founder and CEO Simon Fafard says he knows how to increase solar power cells in satellites by as much as 50 per cent, an unheard of one-time boost in power for the industry.
He has thus far raised more than $1 million thanks to the Business Development Bank of Canada with hopes that another $3 million to $4 million in financing is not far away.
Pumping in an extra 50 per cent of juice to a satellite allows it to add channels and extend its life by 25 per cent. It can also be launched from smaller and cheaper spacecraft, which saves enormous costs.
Solar power works when the sun's rays hit the solar panels, which in turn create electricity that is stored in batteries. As it stands now, only about 28 per cent of that solar energy can be converted to electricity. "This can take it to 40 per cent," Mr. Fafard said.
With a $300-million market in space technology available for the picking, Cyrium appears ready to start cashing in. But after four years of research and development – mostly done on his own with plenty of government help through financing and laboratory access from the National Research Council – money to reach the next step is essential.
"We're still in the seed stage, although we received funding from the BDC (last fall). We're looking at funding for about 18 months, which is about $3 million."
Mr. Fafard said he was "in discussion with some Tier 1 venture capitalists and we hope to finalize something shortly."
He earned his doctorate in optical properties of semiconductors at the University of Ottawa, completed post-doctorate studies in California and was senior research officer at the NRC. He also worked for a short time at Alcatel before founding Cyrium.
Iotum Corp.
Founded: 2003
Employees: 10
VC to date: Undisclosed
"The pain that we a trying to solve is that we live in a huge interrupt driven world. What our application does is add context to incoming calls: It identifies the who, what, where, when, why and how of every call and then it routes and manages every caller according to that information and your preferences. You'll never have to worry about telemarketers again. – Alec Saunders, CEO
Ask any efficiency expert and they'll say that interruptions are the bane of the productive worker, with the telephone being one of the worst offenders.
The average worker is interrupted more than 70 times daily and almost four out of every five create an unnecessary break in workflow. Until now, the only protection workers had was voicemail – 66 per cent of all calls end up there with today's systems, whether it's a telemarketer or a chief executive trying to get through.
While new technologies available on state-of-the-art call servers offer a reprieve to employees at large enterprises, they are often out of the price range of small- and medium-sized operations.
The idea behind Iotum is to bring leading edge applications found on enterprise call servers, such as presence and find-me-follow-me, to small- and medium-sized businesses and home-based offices without breaking the bank.
When deployed, the technology promises to make "always on" communication universally accessible and useful by creating feature-rich voice clients for PCs, SIP telephones, and Wi-Fi enabled portable devices.
Iotum's application works with the desktop e-mail software to make decisions about when a user is available for calls and the times when they should be routed elsewhere. That could be to voicemail or to another worker, depending on the person making contact and the instructions from the employee receiving the call. The application essentially decides whether or not the call is important enough to merit an interruption.
The company was founded over dinner at a local Outback Steakhouse a couple of years ago, which is one of the reasons why the flagship product is code named "Boomerang."
Liquid Computing Corp.
Founded: 2004
Employees: 12
VC to Date: $2 million
"We are pleased with the response from the market. We have a backlog of customers interested in our beta program and venture capital interest has spiked since our broader introduction to the investment community this January. In 2005, it's all about execution." – Brian Hurley, CEO
Liquid Computing burst onto the scene in early 2005 by announcing follow-on investment late last year that brought its seed round to $2 million.
Ottawa's first enterprise server venture play, Liquid Computing is developing a new computer architecture designed to bring the reliability expected in router and switch computing technology to the enterprise server.
The company has been using the money to develop its technology and research potential customers. It also expects to spend some money on payroll, with its a business plan calling for 60 employees by the end of the year.
Liquid Computing has offices in Ottawa and Los Altos, Calif. and has assembled an impressive leadership team that includes former executives from Nortel Networks, Oracle, Sun Microsystems and Symbium.
The technology promises to help companies exploit the unused computing power of dedicated processors reserved for specific functions.
Liquid Computing's solution replaces multiple servers with a processing pool that shifts and reacts to demands. Targets for the technology include technical computing users in scientific research, oil and gas, bioscience, and mechanical design and engineering applications, which consume huge amounts of processing power.
While a logical step in server evolution, the technology only became possible with the wider availability of both high performance processors and certain applications once monopolized by large communications corporations.
Trials are planned for January 2006 with production expected to start by the end of next year. The company is already looking for more cash to add to the $2 million it announced in January and expects to close a Series A financing round by the end of the first quarter.
Lumenera Corp.<.i>
Founded: 2002
Employees: 37
VC to Date: Boostrapped
"We're very conscious of our financials. We've bootstrapped the company since its inception and have invested the profits back into the company." – Huw Leahy, president and CEO
Growth of more than 400 per cent the past year, which followed a 500-per-cent hike the year before clearly illustrates that Lumenera is already a leader in the field of high-performance digital cameras.
Specializing in the industrial, scientific and security sectors, Lumenera now has more than 400 customers in 45 countries, a recent expansion into Boston and a silver award for exporter of the year from the Ottawa Chamber of Commerce.
Not a bad start for a company founded in 2002 by five men who bootstrapped their way to 37 full-time employees.
The countless end users of their products include all sorts of industrial customers who need imaging, including producers of produce who use Lumenera's cameras on the line to separate good vegetables from bad.
In the scientific field, for example, a camera can be affixed to the top of a microscope – known as microscopy – so the image can be brought into a computer for storage, to be analyzed and manipulated.
Cameras are also used at border controls where they beat their analogue cousins by connecting to the Ethernet network.
"They're much more intelligent," Mr. Leahy said.
The CEO pointed to what he called a true team for much of the firm's success. "It's been a great effort by everybody, not only in sales."
Lumenera's cameras are a unique blend of speed, resolution and offer custom design services to OEM partners requiring specialized hardware and software features.
Mr. Leahy founded the company with VP sales and marketing Greg Bell and chief technical officer Kevin Mayer, all of whom worked at Vitana, as well as Andrew Nelson and Simon Tardif.
Nakina Systems
Founded: 2002
Employees: 60
VC to Date: About $9.5 million
"We're working with a lot of startups and getting some attention from Hewlett Packard. And within the past week, we've had onsite visits from such giants as MCI, Sprint, Bell and Horizon." – Dave Vicary, president and CEO
Nakina Systems is on the cusp of taking the next step towards becoming a global integrator of telecom networks. According to Mr. Vicary, a swarm of Tier One telecom companies are interested in what it has to offer. The company's first sale, in 2003, was with U.S. telecom giant MCI. Last October, Nakina secured $US$2.25 million in debt financing from Toronto-based MMV Financial to boost its R&D efforts and keep pace with the needs of its growing customer base.
The company's core technology is a suite of multi-vendor element management software applications. The software can be deployed either as independent, stand-alone applications or on Nakina's Open Framework platform as part of a fully integrated suite for all kinds of wireless and wireline telecom networks.
In layman's terms, a giant like Bell Canada will use four or more software systems to handle tens of thousands of elements in its network. Nakina can pull it all together under one roof and one system to lower costs and increase productivity, especially when it comes to training.
"We offer a high-quality product that can connect a number of systems into a single one," Mr. Vicary said.
Before co-founding Nakina, Mr. Vicary headed up Nortel Networks' Preside Optical R&D operation.
Netistix Technologies Corp.
Founded: 2002
Employees: 16
VC to Date: Not disclosed.
"Our main focus is the state of health of the vehicle, as opposed to where it is. We collect the fitness and condition of the vehicle then convey that information wirelessly to the company." – John Woronczuk, assistant VP of corporate business development
Netistix develops, markets and sells vehicle relationship management (VRM) systems for businesses that have significant fleet operations, including fleet management companies and their repair service providers.
The product plugs into the on-board diagnostic port, something every vehicle built since 1996 employs. Service technicians plug their scanners into it.
"We use wi-fi to transmit the data from the vehicle to a hot spot like the fleet yard or a service centre," Mr. Woronczuk said.
Netistix technology can also capture the location of the vehicle, but its focus is to stop potential breakdowns and accidents before they occur.
"We offer (location services) as an option, and we save companies money because we don't use cell phone air time to convey the information," Mr. Woronczuk added. "It's the cell charges that'll kill you."
The company recently signed a contract with national parcel delivery firm CANPAR Transport L.P. "They were a pilot of ours and now we're rolling out to eight locations across Canada," Mr. Woronczuk said.
CEO Gordon Echlin said this deal is the beginning of bigger and better things to come. "This is a vote of confidence for our technology and value proposition and we are confident that the results of the trial will impress CANPAR and ultimately produce significant savings for this portion of their fleet."
Other pilots currently underway include a municipal police force and a federal government department.
Mr. Echlin and Mr. Woronczuk worked together at Newbridge for about 11 years and prior to that at Mitel.
Nimcat Networks Inc.
Founded: 2002
Employees: 36
VC to Date: $7.55 million
"We had a dizzying year in 2004, moving on product development, marketing, partnership and sales activities. In the first working day of 2005, I promised the Nimcat team that the frantic pace of activity and successes will continue in 2005. The company has a momentum, we have a unique product, and like every other startup we continuously race against time." – Mahshad Koohgoli, CEO
If awards translated into revenues, Nimcat Networks would be a sure bet to pull in millions. While it's not that easy, the accolades have customers taking note of the three-year-old startup's technology.
The company took home an impressive four awards in 2005, including a "New Business of the Year Silver Medal" from the Ottawa Chamber of Commerce, along with being named to the "Pulver 100" for its voice-over-IP (VoIP) technology.
Nimcat spent the year fine tuning its technology, building relationships with key vendors, continuing to increase revenues, and filling out its employment roster.
This year, the company plans to leverage the increased processing power and the emergence of standard communication protocols, such as SIP, to bring affordable Voice-over-IP to small- and medium-sized businesses.
While a number of Nimcat products are expected to hit the market throughout the year, the company said it will be making its first official product announcement of 2005 on Tuesday.
It will also continue to expand its sales efforts and introduce a range of new products, including its VoIP Service Provider modules and new peer-to-peer WiFi mobile solution.
The company's embedded P2P call processing software brings the intelligence usually found at the Private Branch Exchange (PBX) level and moves it to each handset.
The technology can automatically configure new phones plugged into a data network and enables calling without any additional set up or centralized equipment, so once the telephones are connected to the local area network, employees can start talking.
A deal signed with Aastra Telecom has already yielded fruit and a number of other vendors are developing products based on Nimcat's NimX solution.
Pleora Technologies Inc.
Founded: 2000
Employees: 20
VC to Date: Bootstrapped
"Pleora's high-performance connectivity products have set new industry benchmarks for data throughput and reliability over Gigabit Ethernet. This has allowed us to dominate the market for networked image data delivery in the machine vision, intelligent traffic, and medical imaging sectors." – George Chamberlain, president.
While it's been quietly focusing on companies using vision systems for quality control and other applications, Pleora Technologies hopes that more sectors will get the picture.
The company develops hardware and software products that allow imaging systems to connect to industry-standard Gigabit Ethernet networks rather than to specialized equipment.
Essentially, Ethernet allows the system to transfer large amounts of data efficiently and cost-effectively, and over a larger distance than existing offerings. The system also eliminates costly networking gear and replaces it with scalable desktop computers.
Although there were a number of competitors already on the market when Pleora's technology made its debut two years ago, the company's sales have been growing at an incredible pace as customers migrate their imaging to the Ethernet-based system.
While the finances remain confidential, the company did say that revenues are at the "seven figure level" and have grown at about 700 per cent per year over the past two years.
The company has concentrated its sales and marketing efforts in a number of areas, including industrial inspection and control, medical imaging, intelligent traffic monitoring, enterprise surveillance, immersive video, digital cinema, home surveillance, and remote healthcare.
Pleora has embarked on a plan to diversify into the broadcast market where huge amounts of video data are moved through costly specialized hardware and software.
For example, a television station could use the system to call up video-on-demand for news broadcasts or to transfer large amounts of video feeds from remote cameras.
The benefits to the broadcaster are two-fold, with the system eliminating the purchase of a costly video transfer and storage system while at the same time increasing reliability.
While the broadcaster would need to set up a dedicated Ethernet network for the video feed, it is as little as 10 per cent of the cost of existing solutions.
Sipquest Inc.
Founded: 2002
Employees: 35
VC to date: $5.1 million
"2004 was an exceptional year for us. We have the industry's most extensive suite of IP telephony products and combined with our strength in research, we have won several awards and attracted more than 20 customers. In addition, we have developed some key partnerships with Tier 1 players in the areas of Voice over Wi-Fi and wireless to provide soft clients. We anticipate that 2005 will be an outstanding year." – Alain Mouttham, CEO
The popularity of Wi-Fi and a new control technology called the session initiation protocol (SIP) has SIPquest poised to make Voice-over-IP a whole lot easier.
The company's SIP-based applications promise to help companies save money and increase productivity on the go by improving the performance of VoIP wireless connections.
While voice isn't a huge feature for most Wi-Fi hotspots, it's coming soon and SIPQuest will be ready to help executives on the go stay in touch by helping to eliminate frustrating dropped calls. Unlike data where a small blip in the connection causes a short delay in transmission over the network, in many cases the same interruption would cause a voice call to be bumped.
Developed at Columbia University, SIP not only makes Wi-Fi roaming easy, it also allows dynamic and interactive sessions involving multimedia elements such as video, voice, chat, gaming and virtual reality.
With SIPQuest's WiFi handoff software embedded in vendor networks, users will be able to roam between access points without fear of losing touch.
The technology had the company walking away from the eighth annual Ottawa Venture Capital Fair with a best of show award last October. In the last three months, SIPQuest has added an Internet Telephony magazine 2004 Product of the Year award and a 2005 Frost & Sullivan Excellence in Research of the Year award.
The good news is expected to continue this week with the announcement of a partnership with Nortel Networks to deliver advanced SIP-based multimedia services to residential and corporate customers over wireless handheld devices.
Inside a company's headquarters, SIPQuest's technology will allow workers' cellular telephones to switch automatically to an internal Wi-Fi hotspot with all calls routed through the enterprise data network.
Soma Media Inc.
Founded: 2001
Employees: 5
VC to Date: Bootstrapped
"What works in our favour is the conferences are once a year on a pretty fixed schedule so we have yearly planned bookings. They're happy with us, so we get asked back the following year." – Romy Randev, CEO
Soma Media is tackling the conference business with a turnkey solution than can create a fully searchable and indexed database of multimedia material that can be distributed on the Web and by CD-ROM or DVD.
Clients include professional organizations, international conferences and corporations that need to distribute multimedia content to a wide member base. Mostly, it's the computer graphics and gaming industry.
"Our goal is to continue to expand that domain then branch out into other areas like perhaps the medical field," Mr. Randev said.
Soma Media focuses on technology-themed conferences for clients such as ACM SIGGRAPH and ATI Technologies with highly technical content by providing multimedia production services. On-site logistics for video capture as well as on-site promotion and product sales are also part of the package.
The company's custom Speaker Data Management System (SDMS) can collect and track copyright information and efficiently search and sort speaker names and presentation schedules. The SDMS tags key words and links to online information, which can then be integrated into the user interface.
Mr. Randev's background includes communications, new media design and production coupled with a graduate degree in architecture, all of which gives him a unique perspective on devising creative digital media applications. He has worked for organizations including ATI Technologies, ACM SIGGRAPH, Cognos, the Canadian Museum of Civilization, the Information Technology Association of Canada (ITAC), Canada Council for the Arts.
Triacta Power Technologies Inc.
Founded: 2003
Employees: 16
VC to date: Undisclosed
"When I created Triacta, my vision was to grow a company based on solid fundamentals. In less than two years, we've done exactly that - we have great products, repeat customers and orders on the books. 2005 will be an exciting growth year for us, as Triacta transforms from a promising start-up to a profitable, sustainable entity." – Rob Brennan, CEO
With the Kyoto Accord making energy savings a key part of doing business, Almonte startup Triacta's smart meter technology promises to be in the thick of the action.
The meter allows landlords to charge individual tenants for actual power use rather than bill an average of the electricity cost to each unit.
Triacta signed a five-year contract worth a minimum of $15 million to provide power-metering equipment to Toronto sub-meter player Stratacon Inc. in December. The deal came a few months after the commercial launch of Triacta's products following a trial with Ottawa River Power that yielded power savings of 10 to 30 per cent.
The company's equipment encourages energy saving as tenants are more likely to conserve when they know that waste will come out of their pocketbook.
In Ontario, about 900,000 rental buildings – 60 per cent of the total – have single meters where landlords can't measure individual usage.
Anyone connected to a smart meter can log onto a secure Web site that displays individual electricity use and identifies times of high consumption, which helps users understand and reduce costs. Triacta claims that power use drops by about one-quarter when tenants' bills reflect their actual electricity use.
The clipboard-sized Triacta meter connects to a customer's breaker panel and monitors up to 20 residences. It automatically relays a computerized report to the customer using an Internet connection, wireless communications or over power lines.
Triacta's technology also has the advantage of meeting the technical specifications outlined in the Ontario Energy Board's Smart Meter Implementation Plan, which calls for 800,000 monitoring devices to be installed across Ontario by the end of 2007.
Last month, Triacta's success found the company short-listed for the Ottawa Centre for Research and Innovation's 2005 Most Promising Start-Up Award. The winner will be announced Apr. 20.
Wrapped Apps Corp.
Founded: 1999
Employees: 10
VC to Date: Bootstrapped
"Anybody who uses a computer will benefit from this. It doesn't require any download of the software platform to the computer." – CEO Rob Lewis
Wrapped Apps is sitting on a product believes will change the way the world uses software. After more than four years of effort, the company has developed an advanced enabling technology solution that allows organizations to access and deliver applications as a service, a process known in the industry as "software as services" (SaS).
What this means to the layperson is that consumers can rent software applications on the Internet rather than purchase them outright from a store. This allows the software to be accessed from any computer in the world instead of just the one to which the license for is attached.
The benefit to the consumer is access from anywhere and a lower price. They pay, quite simply, for what they use. And, as upgrades are made to that software, the consumer will benefit the moment it occurs.
For software companies, more product can be distributed to more people at a cheaper price. One-time purchase revenue is exchanged for consistent cash flow.
Wrapped Apps first entered the market to enable applications to be delivered on-demand as a service over the Web, but significantly expanded in 2003 by adding desktop productivity and enterprise-class applications to its enabling technology.
Mr. Lewis said many software companies are hopping on the bandwagon. "They have to, it's in their best interests."
Mr. Lewis, who has been an adviser and director of Wrapped Apps since 1999, brings 25 years of experience in the financial services, legal and retail sectors. In addition to 20 years of experience in computer sales and consulting, he has been writing, teaching and consulting to the legal profession since 1987. His most recent full-time position was as managing partner of Lewis Langevin LLP, one of Ottawa's leading law firms.
