New funding will help digital media firms tap into university research and global markets

A new $10-million equity fund for early stage companies and up to $600,000 per company for international partnering are among the new initiatives announced this week to move homegrown digital media and information and communications technologies (ICT) more quickly into the market.On Tuesday, the federal government launched a new national commercialization centre that will see the Ontario Centres of Excellence (OCE) partnering with the Ontario Municipal Employees Retirement System (OMERS) on a new $10-million fund that will purchase equity stakes in early stage and start up technology companies across Canada.The Centre for the Commercialization of Research (CCR) has also partnered with International Science and Technology Partnerships Canada (ISTPCanada), which will make money available for small companies and university researchers to establish a foothold in world markets through research partnerships with companies in India, China, Brazil and potentially other countries.Mark Romoff, president and CEO of the OCE, says the focus of these and another new initiatives from CCR will be in economically crucial sectors such as digital media as well as energy, the environment and natural resources, and health and life sciences."The Ontario government has identified four sectors of principal focus and digital media/ICT is one of those, so we're very engaged through our Centre for Communications and Information Technology and now the CCR on that particular space," told Canadian New Media at the Ottawa launch.CCR will act as a matchmaker, linking companies that need further development of a product or technology with university researchers that can provide the expertise."It's about plugs and sockets," explains Romoff. "If companies have a technology challenge we try to identify the problem solver in the academic research community. We then have money that enables us to share the cost of that research with companies and also manage the research side. The key is to help companies identify what they need in order to enable them to either become globally competitive or stay globally competitive."While details are still being worked out, a VP with OMERS says its initial $10 million investment with CCR represents a broader strategy by the pension fund to expand beyond traditional venture capital and fund investing and towards what he describes as "life cycle investing"."This is a direct play, moving away from fund investing to direct investing and we believe the OCE is the best example of how to do that," says Philip Haggerty. "We're still mapping out how best to apply it, and how best to follow on with it, but this does open the door to the idea that we're in this for the long term."The OMERS announcement comes at a time when venture capital and other financing for early stage companies is plummeting with Q2 activity down 31% compared to the previous year - the lowest recorded in almost three years according to the Canadian Venture Capital Association.Romoff says investing in early stage companies and start ups is "virgin territory" for pension funds. "They don't tend to play in this space, so for OMERS to take a strategic decision and invest in brand new companies or early stage companies is a significant decision on their part. This initiative is driving very interesting and precedent setting partnerships that will recalibrate the landscape."OMERS, which manages $3.6 billion of assets, also has equity stakes in other communications companies, including the Cookie Jar Group of Companies (formerly Cinar), Q9 Networks, an Internet infrastructure service provider, and wireless broadband company Terago Networks Inc.Finding international partnershipsAs part of its contribution to CCR, ISTPCanada will provide up to $600,000 in funding to companies aligned with an academic researcher and international partner."Every project has to be bilateral. If they don't have an international partner when they engage with ISTPCanada, we will help them find a partner," says Bharat Rudra, ISTPCanada's country manager for India.Funding will be used for pre-commercialization R&D, "leading to the point where they can take it to commercialization on their own," adds Rudra. "Our money does not get used for marketing or sales."ISTPCanada received $20 million over five years from the Department of Foreign Affairs and International Trade, and has set aside a tranche of funding for each country, including $6.75 million for India and $5.25 million for China.CCR has also an agreement with IBM Canada to develop next-generation technologies related to virtualization and cloud computing.

New funding will help digital media firms tap into university research and global markets

Broadcast | November 27, 2008

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