We’re seeing more activity out of angels and late stage investors, new funds are being formed for early investments and more seed investments are being made. We are also seeing start-ups, from across the province, becoming more savvy at leveraging partnerships to drive sales and growth. That’s not to say that it doesn’t take a lot of hard work to ink a deal. But there are deals to be made and that’s a good thing.

Its feels like Investment Week in Eastern Canada next week. On Tuesday, Carleton University is hosting David Arnoff from Flybridge Capital and Carleton alum Charles Chi from Greylock Partners to share some insights on how technology startups can raise venture capital.

Flybridge and Greylock will then join us at the Ontario Venture Summit, October 5-7, where sixteen Ontario companies are going to have the opportunity to pitch to an audience of investors and strategic partners. In addition to the company pitches, the summit also includes six panel sessions looking at various financing strategies and models that can take a company from the basement to the boardroom. They’ll also hear from serial entrepreneur Mark Ruddock, get market savvy with Matthew Strauss, VP RBC Capital Markets, and learn the management lessons from the Masters of Private Equity from Robert Finkel, President of Prism Capital and author, The Masters of Private Equity and Venture Capital.

I’ll wrap up the week in Montreal at the National Angel Summit participating in a panel session and taking on the role of Co-Chair of the National Angel Capital Organization (NACO) for the next year.

All in all a busy week in the investment and commercialization sector. I hope you can join us at the summit – ontarioventuresummit.com

 What are the differences this year?

 1)     Preparation: We have spent significantly more time getting to know the companies and their management teams, and creating a tailored approach to coaching in order to help them build confidence and generate the “wins” they need to move their companies to the next stage. No more shell-shocked entrepreneurs in front of potential investors.

 2)     Practice: This is mandatory. Doing dry runs with friendly investors before companies make their investment presentation to potential investors makes a huge difference. The feedback is constructive and provides a genuine opportunity for companies to make improvements, anticipate questions and plan ahead.

 3)     Match Making:  While working with entrepreneurs to be more targeted in their approach to investors we are also working with investors to make sure there is the right level of interest and that they are aware of the opportunity they are about to be presented with.

 4)     Seasoned Entrepreneurs: It’s great to meet such seasoned entrepreneurs. They recognize the value of mentorship and are open to the coaching we are able to provide that can help them structure their efforts in order to raise funds and create lasting relationships out of the introductions that we are able to facilitate for them.

5)     Angel Activity: There is a light at end of the funding tunnel. While it won’t solve all the investment issues and make every startup company happy, we are witnessing a tangible increase in angel activity.  Their focus on particular industries and niches is intense and knowing that, we are able to increase the possibilities for successful introductions, strategic alliances and much needed investment.

 6)     Public Exposure: This summer, we’ve had even more occasion to showcase investment opportunities – Grow2010, regular networking events hosted by the Canadian Angel Network, applications to the Ontario Venture Summit and Canada’s Top 10 – all recent and very relevant.   

What will we see this fall? If the summer is any indication then we expect the fall to move even faster.

Since the start of the Canada’s Top 10™ Competition, winners from across ICT, Life Science and Cleantech have raised more than $600 Million in investment to really take their companies to the next level and become global players. Have a look at some past winners like Bel Air Networks, I Love Rewards, Variation Bioscience, Bioniche, and Paradigm Technologies or Menova Energy and you’ll know what I mean. These companies all had similar traits that made them catch the eye of investors, strategic partners, and customers – the Competition, its partners and sponsors, and its jury members including angels, venture capital and private equity investors from around the world, was just the catalyst to help get them in front of the right people at the right time.

What do winners receive for this prestigious honour of being named a winner? I’ve already mentioned that winners are chosen by investors that may have a direct interest in digging deeper into the companies they chose. Even more important than that however are the targeted road shows and events that winners will have a chance to participate in. In addition to a one day dedicated coaching session with partners and sponsors to get them ready to raise capital, other events where we will showcase the Canada’s Top 10™ winners of 2010 will include the Banff Venture Forum, the National Angel Capital Organization Summit, and a host of targeted investment and partnering events in Silicon Valley, Boston, New York, Washington and locations in Europe. All for winners and alumni of the Canada’s Top 10™.

So what are we looking for in this year’s competition? First of all, applicants need to be raising funds in the next 12 months of $1M or more and must fall in to the broad categories of ICT, Life Sciences and Clean Technology. Technologies should be validated and there should be a defined market opportunity and path to market. A sales plan and a strong management team round out the high level categories. Keep in mind that an independent jury of investors makes the final decision based on their collective agreement on investing in an applicant. Think syndication in its simplest form with investors at least agreeing on the best investments.

I am looking forward to the road ahead and to seeing all of the applicants over the next two months. The competition is open now and will remain open until August 20, 2010. Winners will be announced in early September. You can find more information at www.topcanadiancompanies.com .

See you on the road.

In the budget, the government removed the Section 116 tax barrier, a barrier that has prevented Canadian emerging technology companies from obtaining international investment dollars to be truly globally competitive. A summary of Section 116, courtesy of Deloitte (www.deloitte.ca) , is as follows:

Withholding and Section 116 certificate process — The overwhelming majority of foreign VCs are not subject to Canadian tax when they sell an investment, but face a delay of many months to work through the Section 116 tax clearance process until funds can freely flow to them. Many foreign VCs are structured such that each of the investors in the VC — sometimes hundreds or even thousands — is subject to this clearance process as if they held the investment directly. This delay results in lower returns and frequently causes direct financial loss to investors. Canadians who invest in the United States, the United Kingdom and other major global markets do not face such taxes or delays from red tape.

Requirement to file Canadian tax returns by foreigners who don’t owe taxes creates hundreds of pages of unnecessary paperwork — Canada imposed tax filing requirements in circumstances where no taxes were payable by these investors. When a foreign VC sells an investment, each investor of the foreign VC has to file a Canadian tax return even if they don’t owe any taxes. This results in literally hundreds of pages of documents that are required for signature and processing for a single sale. This tax return filing issue also applies to certain Canadian public companies.

What does this mean for emerging technology companies raising funds from foreign investors from the US and abroad? It means those companies with high potential will be able to more easily attract foreign investors. It means that more foreign capital can come into Canada to invest in some of our leading knowledge based enterprises when large amounts of capital are still lacking. It also means that Canada can remain and grow competitively in the global marketplace, showing the world that we are innovators most innovative people and companies in the world.

If you would like more information on Section 116 and the federal budget, there are a plethora of resources including the Government of Canada website. Many of OCRI’s members and partners also have commentary and position papers including the CVCA (www.cvca.ca), BIOTECanada (www.biotech.ca) , CATA Alliance (www.cata.ca) to name just a few. Watch for upcoming professional development sessions from the Investment and Commercialization Group at OCRI (www.ocri.ca/investment ) to further educate CEO’s of emerging technology companies in Ottawa about the impact of this change on raising capital.

IPeak is a great Ottawa example of a company that started with a good technical idea and a desire to learn how to turn that idea into a successful enterprise.  Not only did Matt Williams, founder of IPeak, help develop the company’s core technology but Matt was very open to learning from others who had built companies before.  He was able to gather the best people around him early on to move the business forward.

IPeak was a two-man operation when OCRI’s Investment and Commercialization team began working with them three years ago. When they graduated from the OCRI Business Accelerator they had expanded to seven employees, had secured their first sale, and raised over $1M in angel financing. They also were selected as a winner of the Canada’s Top 10 Competition which gave them exposure to a broad range of investors in Canada and the U.S. at an early stage.

Pulling together the right team has been one of Matt’s key strengths as a founder. He was not afraid to let go of the reigns as CEO and focus on his strengths on the technology side of the business as CTO. Couple that with his passion for the IPeak product and validation from key markets that his company met a market need and he was able to attract a high caliber CEO in Martin Horne to help grow the company to the next stage.

IPeak is just one example of how founders in our portfolio are working to build success in their own verticles and businesses through working with our team. It is an approach we think will result in the growth of more leaders like Matt and more growing, competitive companies like IPeak.

That’s the type of development that OCRI is working towards for Ottawa companies and entrepreneurs.