Investors who attended last week's seventh annual Ottawa Venture Capital Fair emerged from the event with some sound advice for the city's high-tech startups.

If there was a solid theme that connected all of their words of wisdom, it was entrepreneurship.

Ottawa companies, VCs said, have to look beyond the traditional telecommunications sector by latching on to new and innovative ideas that can quickly be turned into marketable products. This could include capitalizing on what many are calling the convergence of computing and communications, said Mike O'Neill of Massachusetts-based Kodiak Venture Partners.

O'Neill said Kodiak is constantly looking to the Ottawa region for entrepreneurial talent.

"As we all know," he said, "telecom has been relatively hard-hit over the last few years."

But local companies are reacting positively to the downturn by shifting into wireless and mobile devices, he added.

"I think these are all very positive trends and areas that are very active in the marketplace that would move business out of the traditional communications infrastructure and into some high-growth areas," said O'Neill.

But Brian Hanson of Massachusetts-based Advanced Technology Ventures suggested it is not enough for companies to pour all their energies into the technology.

There must also be some key ingredients to attract investment, namely some level of intellectual property protection, validation from major customers and a strong management team with members who have had experience working in the United States. If the team needs topping up, that's no problem, said Hanson. "We can take care of that."

One of the fair's speakers, Michael Mullarkey, emphasized that any company looking for VC funds must constantly engage in marketing and selling, investment in innovation, while also cultivating capital relationships, whether through a VC or a bank. The CEO of Workstream Inc. echoed Hanson's comments by saying companies need a strong management team, adding the team needs to have "equity that was directly purchased, not given to them through options."

"Smart VCs are looking for senior managers that have sales, marketing and management experience to grow a company from a million dollars in revenue to $20, $40 or $50 million," he said.

As for the sectors that attract VCs, Hanson identified wireless and software. Wireless because products can be brought to market quickly with very little capital. Software because there is a huge demand among IT managers for various types of management technologies that can perform more tasks with less resources, he said.

Some VCs in attendance agreed voice-over IP and wireless LANs comprised some of the most promising markets to emerge from Ottawa's post-boom era.

O'Neill identified wireless and VoIP as "areas where Ottawa entrepreneurs are taking the really deep expertise they have and seeking out new markets."

"We're seeing classic entrepreneurship and that's what we like," O'Neill said of companies that are developing VoIP, a technology that provides voice telephony services over an Internet connection.

One of those companies is Ottawa-based SIPquest Inc., an integrator of multimedia communications over converged Internet protocol networks and one of the fair's 20 corporate presenters.

SIPquest CEO Alain Mouttham said the level of interest in his company and its products "has been very high". The interest, he said, stems from SIPquest's software, which allows users of VoIP-enabled, hand-held computers to roam freely from one wireless-fidelity (WI-FI) access point to another.

"Usually, a large building is covered by multiple WI-FI access points," said Mouttham, referring to the points that relay a signal from a wireless local area network (WLAN) to a mobile user. "Today, nobody knows how to convey (VoIP) over WI-FI and allow users to roam seamlessly. But we have this technology."

Mouttham said he has talked to several VCs in the area, such as Skypoint Corp., as well as Massachusetts-based Commonwealth Capital Ventures. At the beginning of this year, Toronto-based Covington Capital Corp. invested US $2 million in SIPquest and the VC plans to invest again in the second round, said Mouttham. "We're talking to many VCs, and a couple of them in Ottawa are in ... the last stage of the decision process."

Similarly, Belair Networks Inc., another presenter at the fair, is working closely with WLAN networks as it aims to take the technology beyond hot spots and make it as ubiquitous as cellular technology. Belair, which received US $7 million in first-round financing last year from VenGrowth Capital Partners Inc. and BDC Venture Capital, has developed a combination of cellular and WI-FI technology into a "cellular-LAN architecture."

"Our product beams signals into a building from the outside like a cellular network, but it's based on standard WI-FI technology," explains Joe Aragona, director of marketing for Belair.

René Séguin, a director of venture capital at BDC, said he is getting confirmation from a lot of people who attended the fair that Belair's product is impressive. In contrast, Séguin said the VoIP market is evolving slowly, "and when that happens it's tough for VCs to make money. " He expects VoIP will continue to be slow-ramping because "there's not a big need for that right now."

"However, there are companies coming up with products that may enhance the speed of (VoIP) adoption, and that's what we have to focus on," Séguin said

Meanwhile, Don Smith, CEO of Mitel Networks, said VoIP could provide a cost benefit to many businesses.

"Let's say you're in the retail industry and you have good networking between your stores using a wide-area network," he said following his address on IT convergence to attendees of the Ottawa Centre for Research and Innovation's technology executive breakfast. "Your voice can get a free ride on that network in addition to the data infrastructure you're already using."