Crown agency seeks opportunities for investment in Northern Ontario.

The development of new technology in Northern Ontario is expected to receive a boost in the near future as the Innovation Ontario Corporation (IOC) begins a thrust into the region.

"There aren't as many businesses from Northern Ontario (which have been assisted by the IOC) as there should be," said IOC Chairman of the Board Donald Green. "We're going to make a concerted effort to help more companies from Northern Ontario."

Green said the region's greatest potential lies with technology which adds value to the natural resources already being produced in Northern Ontario.

"I believe there is the potential for spin-off ideas from some of the major companies," he said.

Green and the IOC's directors were in Sudbury last month for a board meeting to explain the agency's function to local businesses and politicians and to request their assistance in identifying prospective clients.

The IOC, an agency of the Ministry of Industry, Trade and Technology, offers venture capital to technology-based companies to develop products for the commercial market.

Last spring the IOC's budget was hiked to almost $21 million. Since its inception three years ago, the Crown agency has become partners with 175 businesses (out of approximately 1,400 applicants) and invested more than $30 million. The businesses are involved in such activities as computer software development, electronics, engineering and medical product development.

"We do not finance research," Green explained to the approximately 100 people who attended the information session. He stressed that the IOC does not offer loans or grants, but becomes a partner in the project.

"With our investment, a fledgling enterprise will have the capital to get over that first hurdle in its race for commercial success," Green added.

Following his address, Green said the agency's 14 directors are entrepreneurs and are well aware of the frustrations and triumphs associated with product start-ups.

"There's nothing harder than having an idea and trying to get that idea to the marketplace," he noted, adding that the IOC will continue to invest in a company during the marketing stage, and until the company either holds a public offering or has the financial resources to operate without IOC investment.

"Once that happens, we get out," Green explained. "If it's a successful business they usually buy us out. If it's a failure we just write off the investment."

Green said it is too early to assess the success of the program.

"We've been in existence for three years, but it's only been during the last year that businesses have really been taking advantage of the program," he explained.

RISK

During his brief address Green told the Sudbury audience that the IOC is prepared to accept a higher level of risk than private companies offering venture capital.

The following questions outline the criteria for financing:

Will the product or service work?

Is there a market for the product or service?

Does the company's management have a financial interest in the project?

Is the company able to deliver the product or service?

Are the financial projections realistic?

Is there a potential for a financial return for the IOC?

Can the IOC divest itself of its stake in the company?

According to Green, the IOC operates on a non-competing basis with the private sector.

"If there's another company that does what we do, we step aside. We don't compete with anyone," he claimed.