How Ottawa's VC scene might emerge from its 'nuclear winter'

vc drops
Ottawa fell off a Top Ten list of Canadian cities receiving venture capital funding.



After a first quarter that saw venture capital investments in local firms drop dramatically from a year earlier, Ottawa failed to crack a list of Canada’s top 10 cities for VC funding in the first six months of 2021, a new report shows.

While Canadian firms set a new quarterly record for total venture capital funding, landing 166 deals worth a collective $4.59 billion, the National Capital Region was nowhere to be found in the latest study of the country’s VC scene from CPE Analytics.

The Ottawa Business Journal spoke with industry veteran Leo Lax about how he is interpreting the data in the latest edition of Behind the Headlines podcast. This is an edited transcript of that conversation.

We were way behind big cities like Toronto, Vancouver and Montreal. But we’re also behind Calgary, Quebec City, Saskatoon, Fredericton, Burnaby, and Halifax. You’ve been involved in the tech sector for so long, and you’ve been involved in financing. Does that concern you?
When you look at statistics you will find that areas that have the larger companies, will of course, attract larger amounts of money. In Ottawa, we have a lot of emerging companies and established public companies. We are emerging from something I would call the ‘nuclear winter’ where the tech industry has been under stress. Particularly the industry that Ottawa has been known for, which is the telecom industry. The good news is we are emerging from that.

You’re saying the nature of Ottawa’s technology industry is different and that’s why we’re not seeing as many VC deals?
An early-stage company will absorb $1-10 million in their initial few years of growth. A later-stage company that is maybe $50-to- $100-million. That’s when you aggregate it and you put it all together, that’s when you get more mature companies, attract larger amounts of money. In Ottawa, we’re just starting to get those companies to a mature state.

Give us the elevator pitch for [your new venture] L-Spark. Are you hopeful for the companies coming out of it?
It is an amazing time - it really is. Our entire world is moving on from a lightly connected environment where we were connected with telephones and voice. Now we are connected through mobile phones, digital equipment, a variety of devices that you wear on your wrist and connect [to] with your headset. I am hopeful that we are going to be able to participate in that enormous investment that is now put in place by the major communications environment and the large carriers around the world.