Ottawa area wireless companies say access to capital and the need for greater staffing requirements are two of the most critical success factors for them going forward, according a survey of companies in the Ottawa Wireless Cluster. Conducted by Deloitte and released earlier this month, Ottawa Wireless Cluster 2003 Survey: Findings Report notes that many companies identified "the attainment of sufficient financing" as their number one hurdle. Surprisingly, about half of Ottawa-based companies indicated recruiting and retaining staff as a key success factor, and a Deloitte partner says this is a positive sign that an economic turnaround for Ottawa-based wireless companies is afoot. Deloitte’s Carol Paradine tells Report on Wireless that financing is always a key issue, especially given how tight capital markets have been for the past three years. The rank of staffing as a concern was the greater surprise, she says. "I thought what was more surprising was how close the retention and recruiting was to the financing as being a critical success factor, which given the layoffs that happened in the technology sector, it’s nice to see that, ‘Hey we’re planning on hiring and management team is important to us,’" she says. Whether this can be viewed as another sign of a turnaround in the tech sector, Paradine couldn’t say for sure. "I certainly think that the positive views coming from these companies is a signal. How much of one it is, it’s hard to tell." On the issue of financing, the survey notes that more than 50% of funding is derived from government sources and founders/owners. Only 3% came from angel investors, but Paradine says that level may actually be higher since 19% of respondents said funding came from "other" sources without providing more detail. "You’ve got to speculate is that something we may have traditionally called angels? Is that friends and family?" Paradine asks. "The angels at 3%, I was surprised it was that low. Certainly the companies I’ve been out to see and hear are getting angel investors involved and they are getting friends and family to contribute." In recent years, there has been an apparent lack of involvement from angel investors - the result of various factors. While the treatment of financing from angels under the Canadian tax regime has been addressed to some degree, the types of financing venture capitalists are offering, "can really squeeze out the angels in subsequent rounds," says Paradine, adding that doesn’t mean angels aren’t out there. "The question is, are they investing anymore, do they have the funds disposable and think there is the funding available, that they do have the financial means to invest?" asks Paradine. "If you look at the Ottawa marketplace, even though there was the crash, there was an awful lot of people who made a significant amount of wealth over this period whether it be through Nortel (Networks Corp.), JDS (Uniphase), Newbridge (Networks), a number of others." If seeking financing is a further sign that the Ottawa wireless industry, and tech sector in general, is on the rebound, then Ottawa area companies are bullish on the future of the local technology economy. According to the survey, two-thirds of respondents will seek new financing over the next two years. Sixteen per cent of companies will seek up to $100,000, while 22% want more than $10 million in financing (see chart).