A 40-minute commute and a quick border hop away from Ottawa lies the small town of Ogdensburg, N.Y. The population is hardly more than 10,000, and few will accuse you of dropping by for the sights.
Increasingly, however, Ottawa business owners are looking at the small border town as a big gateway to lucrative U.S. markets.
Michael Golubev, founder of Ottawa’s 3Dprintler, last year launched a new company with a diverse geography. Though Mr. Golubev himself remains based in the capital, his new venture CAD.ai has a team of 10 developers working in Serbia and a small administrative headquarters for sales and marketing in Ogdensburg as a U.S. base.
CAD.ai exists in the same realm as 3DPrintler. The new company is a software-as-a-service solution for viewing and sharing files used in the 3D printing process. Mr. Golubev says the company is doing exceptionally well, already landing a $100,000 seed round and enough early customers to break even and start seeing profits in the next three months.
Mr. Golubev, who still runs 3Dprintler, says his decision to operate the new company in Ogdensburg was heavily influenced by financing options.
“We didn’t get any help from anybody in Canada,” Mr. Golubev says. The federal government’s IRAP program is beneficial, he says, but it comes with a series of inconveniences. He says many American venture capitalists were dissuaded from touching an IRAP-funded company because the grant may contain conditions for repayment if ownership shifts from Canada to the United States.
“We broke all ties, said ‘If you’re not going to help us, we’ll go somewhere else.’”
CAD.ai found immediate American investment in the form of Atlas, a program run by payment processing firm Stripe, which helps to incorporate U.S. firms. Stripe offered to cover the set-up costs, and CAD.ai uses the company for its payment processing in return.
Mr. Golubev compares this experience to setting up 3Dprintler, where he had to pay a premium to a law firm to establish things such as the shareholders agreement.
“Everything changed once we moved to the States … It’s just an attitude. People are more business-oriented,” he says.
The Ogdensburg Bridge and Port Authority has long campaigned to bring companies based in Quebec and southeastern Ontario over the border to operate satellite offices in its industrial park.
Ottawa-based wiring manufacturer Flexus Electronics opened an office in the park late last year, with plans to add 15 jobs in the city over the next three years. In a statement, the company said the location allows it to expand into the lucrative market south of the border and meet “Buy America” requirements for U.S. military contracts.
Other Ottawa companies that have opened offices in the Ogdensburg park include Med-Eng, which makes bomb suits for the U.S. military, and T-Base Communications, a printer of large-print and braille documents.
John Rishe, director of commercial and industrial development at the OBPA, says the authority’s campaign to bring companies into the park has been active for decades and has been fairly successful. The OBPA will often offer low-interest loans to incoming companies, help with duty for overseas products and offer competitive leasing rates when compared with metropolitan centres such as Ottawa and Montreal.
Mr. Rishe adds that an Ogdensburg location might be the path to success for Ottawa companies seeking inroads in the United States.
“It helps their headquarters in Canada. That’s the way we view it,” he says.
The proximity of Ogdensburg to Ottawa allows Mr. Golubev to continue to make use of his local network. He says advisers such as Fluidware co-founder Aydin Mirzaee and Canopy Growth founder Chuck Rifici have been important to the success of his businesses.
Mr. Golubev sometimes wishes he didn’t have to cross the border to grow his company. But he sees a lack of support, in both finance and attitude, from private and public sources in Canada as a disappointment.
“I’m upset,” he says. “I’m a Canadian, but I have to go to the States, to Serbia, to do the business and scale it up properly. We’re going to be a success story. But we’re not going to be a Canadian success story. We’re going to be a U.S. success story.”