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| Don Gibbs, chairman and CEO of Process Photonics. (Darren Brown, OBJ) |
Trying to figure out which startups will make the cut and which won't isn't exactly a simple process. If it were, the editorial staff of the Ottawa Business Journal wouldn't be writing these profiles, they'd be counting their money.
With numerous startups in stealth mode and keeping themselves clear of press, sometimes just finding the candidates can be a daunting task. For example, one of the startups pegged for success by at three sources has no website and isn't listed in the phonebook. They simply do not want to be found.
Fortunately, the OBJ also has a wealth of sage advice at its fingertips from a wide variety of experts in the technology sector who lend their opinions and nominate their picks for the most promising startups in town.
Once potential candidates are identified, taking a look at management teams, previous track records, and the trends in the marketplace help narrow the field. From there, the paper selects those that seem to fit best in the market and have the biggest opportunity.
These days, applications and processing power seem to be the areas where the majority of startups play and the space where many will find success. Funny, that's what Terry Matthews keeps telling people around town and we think he might be on to something.
Firms such as Emerging Memory Technologies are figuring out how to squeeze more speed out of already lightning quick Internet connections through better processing power. Process Photonics helps its customers find more speed, using expertise to push technology forward for their customers.
Others, like NewStep Networks, focus on developing applications to find new revenue streams for service providers. The rest are bringing applications to market that target small slivers of a vertical market in the hope of capturing a huge chunk of emerging demand.
While not all may succeed – indeed some "Startups to Watch" do run into trouble – the OBJ has a pretty good track record when it comes to identifying future success. For example, our startups selected for 2005 enjoyed overall employment growth of 54 per cent between March and November. Let's hope we have picked as well for 2006.
ADSCAPE MEDIA INC.
Founded: 2002
Employees: Would not disclose
Venture capital to date: None
Type of product: Software
"Video games offer an ideal, emerging advertising medium to reach the 18-34 year old male offering greater reach, frequency, and measurability than any other channel. This demographic is a significant, yet a very difficult to reach market; they are watching less television and playing more games."
– Dan Willis, co-founder and chief technology officer
It's difficult to watch a big budget movie these days without noticing product logos popping up in scene after scene. It's called product placement and companies pay big bucks to have their offerings front and centre on the big screen.
Adscape Media hopes personal computer, online, and, in the future, next generation platform gamers won't mind the odd logo here and there either, while game developers and advertisers are banking on it.
The company has developed the world's first dynamic in-game advertising technology that it hopes will help them tap into an estimated US$1 billion market by 2010. Built by avid gamers, the company strives "at all costs" to ensure that the added marketing does not diminish the experience for those holding the controller.
To tap into the lucrative U.S. market, the company opened a headquarters in San Francisco late last year, with the research and development facility and the design team remaining in Ottawa. But the Centrepointe Drive location is too small to accommodate projected growth and it will move to new offices in early 2006.
The company hopes to begin growing its employment numbers in the first half of this year, which points to possible financing in the near future. Until then, AdScape's patent firm, Freedman and Associates, continues to incubate and mentor the company, as it has for the past two years.
The key to success was developing technology that got the message to the target audience but did not affect game performance or detract from the gaming experience. The software allows advertisers to target the highly lucrative video game crowd, giving them a solid "in" with the two of the most elusive and coveted groups: 18- to 34-year-old males and 24- to 48-year-old females.
Its AdverPlay product should help increase game related revenues by creating new revenue streams for developers, while also helping to bring a more affordable game to market for end consumers.
Sounds like a win-win for everyone, unless you always are the first to die in Doom tournaments.
BLACK CORAL INC.
Founded: 2001
Employees: 10
Venture capital to date: None
Product: Software
"Black Coral is attempting to automate one of the last luddite bastions, the paper map. Our product vision for Black Coral LIVE is to render the paper map obsolete and by doing that we know we can help save lives by giving more people better information faster. Our motto is "See More, Understand Faster and Make Better Decisions."
– Doug Duncan, CEO
With natural disasters like earthquakes, tsunamis, and hurricanes punctuating the news and the ever-present threat of another terrorist attack looming in the shadows, Ottawa's Black Coral hopes to help the world deal with the fallout.
The company designs and develops software applications for global, real-time collaboration for emergency planning and response. Its Black Coral LIVE geospatial-based software enables field and tactical teams to share information, track assets, and work together in real-time using digital mapping.
Black Coral hopes that its technology will help raise the effectiveness of first responders by ensuring that they have the tools that help them collaborate and communicate during emergencies. The digital map technology helps coordinate the efforts of local and national governments, government and non-governmental agencies, and local communities, which will hopefully ease the chaos often associated with disaster relief.
So far the company has developed the technology using seed funding of $750,000, as well as a $150,000 grant through the Industrial Research Assistance Program. But the customer wins are also rolling in with Black Coral signing a $1-million contract with the Department of National Defence's Maritime Warfare Center in Halifax.
While it also has a number of initial customers including Public Safety and Emergency Preparedness Canada, Black Coral continues to garner attention from other organizations, including the Canadian and U.S. military. It plans to have several systems integrators signed as full partners within the next six months.
Black Coral pegs the emergency management, law enforcement, and military market at about US$1 billion. It estimates that it can reach sales of about US$70 million in five years.
The company participated in Coalition Warrior Interoperability 2005 (CWID) and was also a featured presenter at the Homeland Defense Symposium, a NORAD/U.S. Northern Command co-sponsored event that took place last fall in Colorado Springs.
EMERGING MEMORY TECHNOLOGIES INC.
Founded: 2004
Employees: 24
Venture capital to date: None
Type of Product: Semiconductor memories sold as memory blocks and memory compilers
"We are very proud of our achievements in 2005. We have seen the company go from zero to 24 employees, reached seven-figure revenues from world-class customers in the U.S., Japan and Asia-Pacific and we have developed our own new generation memory compilers capable of generating any memory technology from DRAM to Non-Volatile Memory.
– Sreedhar Natarajan, CEO and president
Emerging Memory Technologies (EMT) hopes to satisfy technology's need for speed. The Ottawa startup is one of a number of new outfits responding to the demand for faster and more robust processing power to run a myriad of new applications.
Founded in 2004, EMT not only responded to the cry for high-bandwidth and low-power consumption processors, it did it in record time.
Working in the embedded memory semiconductor area, the company develops intellectual-property (IP) cores and other products for the embedded DRAM and related memory space used for system-on-a-chip designs.
The company also offers memory design services across different technologies, such as DRAM, along with system-on-a-chip integration services.
Bootstrapped since its founding about 13 months ago, EMT shipped its first products only three months into its life and has already reached $1 million in annual revenues.
If that's not enough, the company also continues to develop compiler technology that complements its IP memory cores.
Last year, EMT's success was recognized when it was selected as one of the world's top-60 technology startups by the influential EETimes. Last May it opened an office in Bangalore (India) and plans to open a U.S. office this year.
EMT expects to continue growing its revenue, staff and customer base in 2006 and announce collaborations with many of the world's top semiconductor manufacturers and vendors.
EPIPHAN SYSTEMS
Founded: 2003
Employees: 10
Venture capital: None
Type of Product: Hardware, with proprietary software designed in
"Epiphan is looking forward to a year of expanded growth, both in revenues and product lines. We have established a strong foothold in the niche VGA signal processing market, and our success with more than 500 customers in 2005 is leading to demand for new products and new product lines. 2006 will be a very busy, and very exciting, year for us."
– Mike Sandler, CEO
If the U.S. Olympic Hockey Team beats Canada in Turin next month, Ottawa startup Epiphan may need to go back into stealth mode. The company is working with researchers at Henry Ford Health Services in the U.S. to further research and development of remote medical diagnosis and help doctors diagnose sports injuries on the U.S. Olympic Team.
Epiphan's core product is VGA2USB, a compact external video graphics array (VGA) signal grabber capable of capturing output from almost any source. It is used to capture images from laboratory, medical, and scientific equipment. It also can create specialized documentation, as well as help analyze monitorless systems and perform quality control on tested systems. The company also has other products that allow the broadcasting, recording, printing and archiving of the captured images.
Epiphan's technology has attracted 500 customers in the transportation field, where it is used for accident investigations and military, training and security applications. The sale of 1,000 units allowed the company to achieve profitability in its first year. Sales are expected to double in the next year and the company intends to add staff accordingly.
Epiphan has outsourced its manufacturing through local firm OCM Manufacturing, including shipping and after-market service. Having the manufacturing in another's hands will help Epiphan focus on new market and product development, including a new product line called the DVI2USB, which is planned to debut next month.
The product will add to the company's line of VGA frame grabber products with a DVI "grabber" that provides diagnostic-quality image capture and broadcast. This will be used in medical and military applications, where very accurate images are necessary to making accurate diagnoses of injuries.
NEWSTEP NETWORKS, INC.
Founded: 2003
Employees: 70
Venture capital: $14 million
Type of Product: Software
"NewStep has made significant progress in establishing ourselves as a leader in delivering value-added converged services over the last 18 months. We saw an opportunity in a new market and made some smart decisions on how to attack that market."
– Neil Baimel, CEO
With 802.11 mobile phones and wireless pagers around the corner, NewStep Networks' will be ready to take advantage of the new technology when it arrives in consumers' hands.
The company's software allows service providers, enterprises, and individual users to take advantage of the continuing convergence of the wireless, wired, and broadband networks.
For example, NewStep's technology will allow users to make and receive calls on a cellular network as they drive into work in the morning, and then automatically shift the call to the company's wi-fi and voice-over-IP office network when they arrive at work.
This means workers can have a single number and voicemail while using multiple telephones at different locations. Others who may want to separate their business and personal numbers can have calls ring more than one phone simultaneously. It also allows the person to dial using their business phone while actually using their mobile.
The technology evolved from the original NewStep application that was developed to help reduce the operational and capital cost of carrying heavy volumes of 1-800 calls to Canada's largest business call centres.
In late 2004, NewStep decided to build on its earlier technology and target large service providers looking for ways to squeeze more revenue from existing equipment and to differentiate themselves from competitors.
"We have a top-notch team that delivered carrier-grade software on time to lead customers, and we are continuing to bring new capabilities to market quickly," said chief executive Neil Baimel.
"These solutions not only help service providers bring in new revenues today, but they also set them up for future services as networks and devices become fully converged.
The company has secured trials with Tier 1 service providers and plans to have several more up and running in the first quarter of 2006 across North America and Europe. To accomplish its expansion goal, the company will need more cash and its second round of financing is already underway.
By Jeff Pappone
Special to the Ottawa Business Journal
