It was the year Ottawa's high-tech world had been waiting for. It wasn't 1999 again by any stretch of the imagination, but the Phoenix was rising.

Three milestones dominated the landscape. Meriton Networks not only bagged a $66.3-million round of Series C financing, it acquired an American company and brought much of it here. It was a noticeable twist on the old story of local companies moving south.

March Networks issued an IPO, the first major offering in six years. CEO Peter Strom led the charge to the TSX, issuing shares at $12, which have since climbed to almost $30.

Finally, Nimcat Networks, a developer of Internet Protocol software, was bought by New Jersey-based Avaya for $46 million in cash, providing a solid return for investors. Avaya's intends to incorporated Nimcat's software into its IP telephony offers and release the first integrated product within a year.

MERITON'S MOTHERLODE

The oversubscribed round for Meriton, a provider of optical networking architecture, was led by two new prominent investors, VantagePoint Venture Partners and Nomura International. Also getting in on the game were Desjardins Venture Capital Group, Newbury Ventures, Primaxis Technology Ventures, RBC Capital Partners, Sierra Ventures, VenGrowth and Venture Coaches/Skypoint Capital.

For new CEO Mike Pascoe, the infusion meant the company had the resources necessary to aggressively pursue the company's business objectives.

"This gives us the opportunity to grow more rapidly," he said at the time. "This will allow us to increase profitability and become a major player."

A few months later, Meriton acquired New Jersey firm Mahi Networks. Company execs said Mahi would hasten marketing plans by offering service providers one-stop shopping and lower costs.

The combined company encompasses about 150 people, 80 of whom are originally from Meriton, said Meriton vice-president marketing Ken Davison.

"This brings us a global sales force. What you're seeing now is an upward move forward in Ottawa. There is clearly the opportunity to expand. What we need to do now is not just R&D, but to expand the sales and marketing team."

In addition to the Mahi employees, Meriton hired about 30 people, most of whom are now in sales and marketing.

"With the financing, now is the time to deliver the goods," Mr. Davison said. "We have our marquis customer in British Telecom, and now we're building the model up for more business. A lot has happened in the past four months, but now we're gearing up for a good year. I think you'll be hearing some very good news stories this time next year."

Meriton is pursuing a market worth an estimated $4 billion a year, but the competition is hungry and doing its best to capture as much of the pie as possible.

"Carriers are looking for a flexible, cost-effective infrastructure that will smooth the migration to a converged IP/MPLS network," said VantagePoint Venture Partners managing director Cynthia Ringo. "Meriton is the only vendor that allows carriers to make this transition entirely through software controls – no card swap-outs, no truck-rolls. It's a winning proposition for carriers – for today and for the future."

"The investors examined the product and the team and they not only invested, but they invested heavily," Mr. Pascoe said of the latest financing round. "They understood the market and believed we could take advantage of it."

He explained that investors see how efficient Meriton is and appreciate how the money is handled.

Should everything go as planned, Mr. Pascoe said an IPO would be possible "in a couple of years. The employees see it and we do, too. The exit plan would be an IPO, but there's a long road before that happens."

VenGrowth managing general partner David Ferguson said the company exhibits all the signs of success. "They have a superb management team and Mike Pascoe is a great leader. They continue to be better positioned in the global marketplace. This company is being taken to the next level."

In all, VC investment in the second quarter of 2005 in Ottawa alone reached $238 million. On Meriton's heels was Zelos Therapeutics with $53.7 million. Tropic Networks welcomed $41.5 million before its reorganization with two Alberta oil and gas companies. Other big winners were Liquid Computing with $17.4 million, Nakina Systems at $12.5 million and Third Brigade with two rounds that totaled $18 million.

MARCH MADNESS

When March Networks opened for trading on April 27, it debuted above its $12 asking price and held on around $13 amid heavy trading. Since then the stock has ranged close to $30, buoyed by strong financials and a golden market opportunity.

March develops and markets IP-based digital video surveillance products and has carved out a profitable niche providing security to U.S. banks and transit systems.

"When we went in and did the pricing of the shares, it was based on the advice of some pretty intelligent people in the investment banking market," Mr. Strom said. "We felt pretty good about the issue price, so we didn't really have any concerns about over-valuing the company.

"We felt pretty good about the position of the company in the market and our ability to keep growing as a company," Mr. Strom said.

His right-hand man, CFO Ken Taylor, couldn't have been happier with the company's fortunes since it went public. "This has been a fantastic year for March Networks. Record revenues and profitability in the year led to a doubling of the stock price since our successful IPO in April. We look forward to continuing to grow the company in 2006 to capitalize on the outstanding market opportunity that lies ahead of us."

NIMCAT NIRVANA

In September, Avaya Inc., a developer of business communications systems and services, acquired Ottawa's Nimcat Networks for approximately $46 million in cash.

"The addition of Nimcat Networks' capabilities is another step in our plan to make intelligent communications applications available to all customers regardless of size," said Avaya global communications solutions vice-president Mike Thurk.

"Peer-to-peer technology is an important emerging communications architecture, and this move clearly illustrates our determination to maintain leadership in IP telephony innovation. When peer-to-peer is integrated with the rest of enterprise networks, businesses will be able to select communications applications to match the right level of functionality and cost to address the needs of different locations."

Nimcat CEO Mahshad Koohgoli said at the time: "By joining Avaya, Nimcat Networks will have access to a larger market and we become contributors to Avaya's global research and product development efforts.

"Our technology will play an integral role in further communications innovations from Avaya. We are excited about being part of a company that shares our vision of smart devices helping a broader range of businesses integrate the benefits of IP telephony into their operations."