More early-stage monies will be available to a wider array of companies, under a new two-pronged approach to be unveiled at the Ontario Centres of Excellence (OCE).

Two new programs, worth a combined total of $46 million over four years, will be launched later this year, said the OCE's director of strategic investment Bryan Kanarens.

There was a time, he recalled, when all an enterprising high tech company with a new idea or invention had to do was share it with someone with access to money. The likely outcome then was sufficient financing.

It's not like that anymore. Industry analysts have long bemoaned the lack of significant early-stage financing for startups looking to go commercial, not just in Ottawa but in the country as a whole.

"The lack of early-stage financing is my biggest concern, and it's a real problem," Debbie Weinstein of LaBarge Weinstein LLP told the OBJ recently.

However, the investment climate may be in for a small boost, Mr. Kanarens said.

First announced by Premier Dalton McGuinty last July, two new programs will replace the existing one the province currently funds at the OCE. It entails more money for disbursement to a wider array of companies, as well as a better process for rejected companies to be more successful down the road.

The first, the Investment Accelerator Fund, will have some $29 million available, Mr. Kanarens said.

"The (IAF) is intended for investment in startups, or early-stage companies," he said. "They must be technology enabled in terms of sustainable growth."

It replaces a current OCE program which helped spawn a number of successful IT companies, including SlipStream (acquired by Research in Motion), CHiL Semiconductor and Ottawa's TenXc Wireless.

Raj Narula was with TenXc in 2003 when it needed money quickly to meet payroll demands. The OCE listened to the pitch, came through with a grant, and in the nick of time too, he said.

"The process worked very well for us," he said. "At the time, we were a pre-revenue company in the middle of funding rounds. We needed funding to close larger funding.

"We found ourselves at the end of the runway. Our funding was still months away, and we had few options. Everyone on the team needed to take a cut, and if you're not able to do that, then the next step is seeing which member of the team, as much as you don't want it, can be let go. Our entire process was so much easier because the OCE was able to step up to the plate."

TenXc, then at about 10 employees, now has close to 50, and will likely soon post revenues, he said.

He and some partners recently formed the TaraSpan Group, an Ottawa consultancy that guides startups to early stage financing. He often finds himself suggesting the OCE.

"Absolutely," he said. "We've just had a company go through the OCE. They were responsible for helping them come out the gate, and it's subsequently gone on to receive venture capital funding."

The new programs will be broader, Mr. Kanarens said, and better able to help commercialize firms. Most of the $46 million will be disbursed to research and development companies in Ontario, he added, much as the previous program did. Two differences, however, exist between the new programs and the old.

Currently, the OCE is restricted to investing in technology developed at Ontario research institutions. "Universities, hospitals . . . any bona fide Ontario institutions."

As well, grants top out at $250,000.

Soon, however, the OCE will be allowed to expand financing to ideas developed outside Ontario, provided the company is now based in the province. As well, the OCE will be able to double the maximum grant, to $500,000. "Doing so, we expect we'll attract the interest of a lot more investors," said Mr. Kanarens.

There are many trickle-down effects from OCE's work, he added.

"It helps build the critical mass for the province," he said. "There will be more research being undertaken, better education of graduate students, more employment, (and) more taxes."

Those contemplating approaching the OCE should do it the same way they would with any other angel investor, he said.

"We look for the same things," he said. "What's the competitive advantage? How competitive is the market position? Who is on the market team? How realistic is the business plan?"

The main goal is to attract further investment, perhaps millions more, from venture capitalists and angel investors. Companies that are turned down will get more than a simple "not ready for prime time" rejection letter, Mr. Kanarens added.

Instead, they will be referred to the second program in the works at the OCE, the $17-million Business Mentorship and Entrepreneurship Program. It will help rejected companies beef up their applications, "so five months down the road, they may be ready."

With the added dollars from Queen's Park, will the investment climate return to the heydays of nearly a decade ago?

Mr. Narula figures the OCE will be around for a while. "It's very difficult to find early stage funding in Ottawa," he said. "The only other groups in town are the Ottawa Angel Alliance. More of the VC groups are looking at early-stage funding, but not as quickly or as much as we would like in Ottawa."

"It's idealistic to think that one day, anyone with a good idea will find funding out there," Mr. Kanarens agreed. "Certainly, this program will build critical mass within that community. Will we be in a position five or 10 years from now to say there's no need? I'd love to say yes, but I doubt it.

"Then again, it's cyclical. Back in the dotcom boom, you could write your idea on the back of a napkin and get funding. It's not like that now," he added.

Both programs may launch by June, but he added the timeline was tentative.