BCE Capital's Jim Orlando. (Darren Brown, OBJ)

More tech sector employees than ever before, more IPOs and a healthy, diverse industry are some of the predictions experts see for 2006.

There's little doubt that 2005 was a positive and healthy year for many companies within Ottawa's tech industry. More than $300 million in venture capital investment and a dwindling commercial vacancy rate in Kanata prove that point.

The question is what's in store for 2006? Will it turn out to be even better or will the tide of good news ebb as the months pass?

OCRI head Jeffrey Dale, Vengrowth managing general partner Pat DiPietro, and BCE Capital managing directors David McCarthy and Jim Orlando looked into the crystal ball to see what went right in 2005 and what the next year may look like.

"Things are going very well," said Mr. Dale. "We saw a great momentum shift a year ago, so the sector in the last year has created almost 12,000 jobs. The recovery is here."

Mr. Dale made headlines last winter when he predicted there would be 100,000 tech employees hard at work within the next few years. Many scoffed, and even he admits to a slight case of hyperbole, but the spirit of his pronouncement looks to be right on target.

"Tech companies are doing extremely well," he said. "More sales and more success equals more jobs. Those companies are rounding out the entire HR spectrum to become complete companies. It's not just R&D now, it's also sales, marketing and public relations. Ottawa is getting a good reputation as a good place to live and work and VC money is coming back. There's still not as much seed money as we'd like to see, but funding for more mature companies is very good.

"It's 1996 again for investors, another bubble, but we have to manage that growth carefully. There has been an over-exuberance in the past."

Still, he isn't afraid to make more predictions.

"We will surpass our previous high for tech employment of 79,000. We'll surpass the number during the bubble."

For Mr. DiPietro, following the growth of companies that were born four or five years ago has led him to believe the next year will reap a healthy crop of successful tech firms.

"One thing I see this year that is very positive is the class of 2001 is really starting to scale. All my '01 companies are improving their revenue quarter over quarter. I have eight companies and they all made zero dollars in 2001 – this year it will top $75 million. Almost all of that happened between 2004 and 2005. They're all building real businesses with real sales and real products. And because all of them are different, you can use this as a proxy for the high-tech sector improving across the board."

With that in mind, he says the time has come for many businesses to reach the promise land of acquisitions or IPOs.

"I see quite a few companies preparing their exit strategies, whether it's through being acquired or issuing an IPO. I think there are right now three or four companies that will go public this year."

At BCE, Mr. McCarthy and Mr. Orlando also see a positive year ahead because all the eggs are no longer in very few baskets. Ottawa tech companies have diversified, found strong management and kept their eye on the bottom line.

"If you're comparing Ottawa in 1999 or 2000, it's doing very well today," Mr. McCarthy said. "But if we can we should try to diversify even more than we did back then and encourage the community to broaden out and go into software and consumer and enterprise markets. If you look at other communities like Boston and Washington, no one sector is always going to dictate how things go."

Investors, they say, are willing to sink serious funds into a company, but only after they conduct more due diligence than they did five years ago and almost always if the business has a strong, proven management team.

"If you're asking about what's attractive to fund," Mr. McCarthy continued, "it would be a team of people who worked already in the past, they have a good understanding of the environment, they've already gone out and talked to potential customers and those customers are wowed enough to buy it because it solves an important pain point for them, and they have some sort of preliminary plan that makes sense."

Both men agree that Voice over Internet Protocol is the wave of the future, even if that future appears to be happening now. Mr. Orlando pointed to last summer's Live 8 concert. While millions of people watched it on TV, he went a step further and watched it in on his laptop. The result was tremendous.

"I watched the event on my laptop and it was better on AOL than it was on TV. What they did was allow you to choose which location you wanted to watch. So if you wanted to see Pink Floyd or switch over to Neil Young, you didn't have to wait for the network to do it because you had complete control. You simply clicked on the venue and you were there."

By Scott Taylor

scott.taylor@transcontinental.ca