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Invest Ottawa, other local groups receive $15.6M in federal funding to boost startups

November 13, 2024

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Invest Ottawa, Carleton University and the University of Ottawa are among the local organizations that will receive a total of nearly $16 million from the federal government to help grow local startups. The Federal Economic Development Agency for Southern Ontario announced late last week it is providing $15.6 million over the next five years to IO and other entities in Ottawa and Eastern Ontario as part of the federal government’s strategy to help spark the development of Canadian companies that generate $100 million or more in annual revenues. The money will be divided up among nine organizations: Invest Ottawa; Carleton University; Algonquin College; La Cité; the University of Ottawa; Kanata-based startup incubator L-Spark; Queen’s University; St. Lawrence College; and Kingston-based Launch Lab. Invest Ottawa was one of three Ontario innovation hubs that received a total of more than $47.5 million in federal funding, along with Waterloo-based Communitech and Toronto’s MaRS Discovery District, to help the province’s most promising businesses scale their operations. Invest Ottawa president and CEO Sonya Shorey said $2 million of the money allocated to Eastern Ontario organizations will go directly to founders to address early-stage funding gaps. The rest will help fund programs and services provided by organizations such as IO, which is best-known for its incubator and accelerator programs that have produced fast-growing startups such as e-commerce bug-detection software firm Noibu and vertical farming trailblazer Growcer. Shorey said Eastern Ontario boasts “an immense pipeline of very high-potential, high-growth, scale-ready companies.” She noted that IO’s Ignition program, a 10-week bootcamp for early stage tech ventures, routinely sees more than 100 applicants vying for the 20 spaces that are available in each cohort. “Those early-stage companies, they really benefit from the collaboration here in our ecosystem … but they often have big challenges in terms of looking for early-stage funding when required,” Shorey explained. “They rely on self-funding to bring them to that stage. When you need that early-stage capital, it’s getting harder to find. Many of the angels are going further downstream. We recognize there’s a gap.” Shorey said the new funding will kickstart the next phase of the Pan-Ontario ScaleUp Platform, an initiative launched by IO, Communitech and MaRS Discovery District in 2018 aimed at helping build the new generation of homegrown tech companies. IO says the program has helped startups in Eastern Ontario raise nearly $3 billion in funding and create more than 4,300 new jobs over the past six years. Shorey says the new federal funding, which is expected to support more than 1,100 local ventures, presents a “golden opportunity” to ra the growth of firms that currently generate between $25 million and $50 million in annual recurring revenues and are striving to reach “centaur” status – $100 million in ARR. “That was a sweet spot that we are going to double down on to help build a more robust pipeline and help more companies get to $100 million in annual recurring revenue,” she told Techopia in an interview on Tuesday.

Growing financial pressures

The latest funding infusion comes at a tumultuous time for Ontario’s innovation hubs, which have been under growing financial pressure in recent years. According to BetaKit, for example, MaRS Discovery District has cut more than 30 jobs since the beginning of 2024 while transferring eight of its advisors from employees to contract positions in a bid to reduce costs at the same time as it searches for new revenue streams. Meanwhile, Communitech laid off 10 per cent of its workforce in late 2022 in response to “challenging economic conditions.” But Shorey told Techopia earlier this year her organization is on solid financial footing. IO, which employs more than 90 people, has an annual budget of more than $23 million funded by a mix of cash, in-kind and non-cash contributions from public and private sources, including all three levels of government. In an interview in June, Shorey said IO works “very closely” with funding partners and clients to ensure it meets rigorous quarterly and annual performance targets. “We are here for one reason only – to help entrepreneurs, business owners and companies launch, grow and scale,” she said. “We feel the buzz – we feel the momentum here.” Erin Kelly, the co-founder and CEO of Ottawa-based tech startup Advanced Symbolics, told Techopia this week organizations such as IO play a key role in supporting local entrepreneurs. She noted that officials at the economic development agency introduced her to potential investors and helped her company, which specializes in AI-powered market-research software, secure a spot in a U.S.-based incubator. “Having that team there is just really important,” Kelly said of IO’s mentors and advisers. “We wouldn't have scaled the way we have without them.”