Ross MacLeod, CEO of Zeligsoft. (Darren Brown, OBJ)

Numbers lowest since economic development agency began tracking in 2001

The Ottawa Centre for Research and Innovation (OCRI) released its Q2 venture capital numbers for Ottawa last week, and they weren't pretty – but for one Ottawa company, Q2 contained definite glimmers of success on this front.

Of the deals announced in Q2 2008, $9.2 million was raised in total by Nakina Systems ($1.2 million), Zeligsoft Inc. ($5 million) and Impath Networks ($3 million), though Impath recently announced plans to move its head office to Halifax, N.S.

Those deals come on the heels of five financing announcements in Q1 2008, bringing this year's total financing to $51.99 million.

Compare that with Q2 2007, when five deals worth $68.9 million were announced by the likes of Epocal ($35.5 million), SiGe Semiconductor ($21.2 million), dna13 Inc. ($5 million), DISTIL Interactive ($2.2 million) and Zeligsoft Inc. ($5 million). Those deals came after a single Q1 financing agreement in 2007, announced by Trigence Corp. for the amount of $8 million.

But Ross MacLeod, CEO of Gatineau's Zeligsoft, said he's happy with the $5 million in venture capital his software company recently raised in a deal with several investors.

Zeligsoft works primarily within the software communications architecture market, providing tools used to develop software defined radios to the U.S. military's Joint Tactical Radio System. "And we've dominated that market – we have approximately 70 per cent of market share," he said.

But he says the company has grown beyond that, and is ready to launch a new product in the fall to address the broader embedded systems market. "And really, the financing was key for us to support that growth and the extra effort we'll be putting in to develop that market. There's additional talent we needed to bring on board, and right now we're in the process of trying to find a marketing and communications person for the company.

"It's key to support that growth, and to really get us into a stronger global position in a larger market."

But Zeligsoft's success story was, unfortunately, rarely replicated by other Ottawa companies in Q2 2008. Despite what many considered a somewhat respectable first quarter – in which $42.79 million was raised by Ottawa companies – this year's Q2 results sunk to what OCRI officials said was one of the lowest quarters since the economic development organization began tracking in 2001.

OCRI president and CEO Jeffrey Dale called the most recent numbers "dismal," though he was quick to give kudos to companies who managed to acquire funds during what he characterized as "a difficult financial time" in North America.

"We've hit a low," he said. "There are significant challenges in the risk capital market right now, and Ottawa is not alone. There's less money available for companies right now ... and we're very disappointed in the current status of the venture capital market."

Mr. Dale went on to add the lack of venture cash flow has triggered provincial government involvement in terms of the creation of new fund pools.

"But the bad news is that it will take at least 12 months before any of that money is deployed inside a company," he continued.