Venture capitalists have been tightening the purse strings this year, but Ottawa hasn’t been hit as hard as the rest of the country, according to the Ottawa Centre for Research and Innovation.
OCRI says from the fourth quarter 2000 to first quarter 2001, Canada saw a 61 per cent decrease in VC investment, the U.S. suffered a 39 per cent drop, while Ottawa experienced a 14 per cent drop. OCRI says the capital city has attracted more than $650 million this year. It also reports the number of jobs is remaining steady. In January there were approximately 79,000 technology workers in the region. That number fell to 75,000 by June.
Denzil Doyle, founder of Doyletech Corp. in Ottawa, says what is interesting isn’t Ottawa’s relative success, but where the money is coming and why. “I think what’s happened is some of the U.S. venture capitalist companies have found Ottawa, as it were, and I think they’re just not slowing down,” he says.
As for the why, Doyle says the technology slide and entrepreneurial spirit are part of the answer. “I think what’s happening is a lot of people from Nortel and JDS are striking out on their own, some of the senior people,” he says.
This, in part, has offset thousands of job cuts.
“It’s my gut feeling that we’ve lost about 9,000 jobs, or at least there’s been at least 9,000 jobs churned,” says Doyle, “but whether or not any of those are out of work I doubt it very much. I think there was a pent-up demand probably for at least 9,000 in the city.”
Frank Gallant, president of Monex International Inc. a Burlington, Ont.-based VC firm, says from a VC perspective things in Ontario are no worse now than they were a year ago. “We haven’t noticed a slowdown in the industry, in fact if anything, we’ve probably noticed it’s picked up this year. The climate is good,” he says.
Gallant says a good project is a good project regardless of the surrounding economic conditions.
“I don’t think that any decent program that makes sense to any lender is going to suffer at any time, says Gallant. “My feeling is that it depends on the appetite for the lender.”