Ottawa’s Ranovus looks to dominate data transfer market with $200M R&D push

Ranovus Hamid Arabzadeh
Ranovus CEO and founder Hamid Arabzadeh. File photo.

Despite landing $60 million in funding over the past five years, Ottawa tech firm Ranovus is anything but a household name in its home base.

But the optical hardware company’s founder and CEO, Hamid Arabzadeh, says the six-year-old venture is poised to come out from under the radar in the coming months. Armed with $20 million in fresh financing from the federal government, Ranovus is planning to move into a new manufacturing and R&D facility in early 2019 and embark on a major hiring spree that could double the 50-person firm’s headcount by the middle of next year.

And that’s only the beginning, Arabzadeh says. The ex-Nortel engineer is confident that Ranovus’s unique fibre-optic data-transfer technology will soon become the new industry standard, and the CEO sees a day in the not-too-distant future when Ranovus could be a tech powerhouse with 500-plus employees as it aims to address a market projected to be worth tens of billions of dollars in the next decade.

High tech and high praise

As lofty a goal as that is, the company has quickly established credibility in a space with few other major competitors.

Ranovus already works with some of the world’s biggest data centre service providers, a group that includes the likes of Google, Amazon, Microsoft, Facebook and Apple.

“Most of our information is in the hands of these people in one way or the other,” Arabzadeh notes.

Transmitting data on the internet consumes a tremendous of energy. The global data centre industry produces a carbon footprint that rivals the world’s airlines, and that flow of traffic is showing no signs of slowing down.

Cisco Systems, for example, predicts the volume of global internet data will triple between 2016 and 2021 as emerging technologies such as the Internet of Things and artificial intelligence unleash reams of information that will be routed through data centres around the world.

Ranovus is trying to make that process cheaper and far more efficient. Believers say the firm’s combination of quantum-dot laser and silicon-based fibre-optic technology has the potential to accelerate the speed of data transfer tenfold while doing it at one-tenth the cost and using one-tenth the energy of today’s bulkier electrical cables.

“That’s what makes this really special,” says OMERS Ventures managing partner Jim Orlando, whose fund was one of the first investors in Ranovus.

“There’s this focus on pushing everything into the cloud and performing very intelligent decision-making within the cloud,” adds Larry Lam, a partner in the Business Development Bank of Canada’s cleantech fund that also has a stake in the Ottawa firm.

“What Ranovus has been developing over the last five years or so has the ability to address and unlock some of these roadblocks.”

Intelligent talent and intellectual property

Tackling an assignment that tough takes talent. More than a third of Ranovus’s workforce owns PhDs, and its C-suite is stocked with veteran of telecom industry leaders such as Cisco Systems, Mitel and Bell Labs as well as Nortel.

“We’ve built a very strong bench and that gives us the ability to scale the company,” Arabzadeh says. “Each of them almost could run a business unit on their own.”

Still in the early stages of commercializing its products, the company has doubled down on R&D, spending in the “low double-digit” millions of dollars each year, Arabzadeh says. He expects that figure to ramp up significantly when the company moves into its new facility early next year, projecting the firm will pour more than $200 million into new product development over the next decade.

Just as importantly, he explains, all that high-tech hardware will be built right in Ottawa at the new facility. Up to now, Ranovus has contracted out its manufacturing to foreign entities.

Arabzadeh, who founded Ranovus in 2012, says bringing manufacturing in-house will ensure that valuable intellectual property stays within Canada’s borders.

“We don’t want that sort of IP to leak to contract manufacturers overseas because then they would easily be able to ... create multiple competitors for us,” he says, noting the firm’s biggest rival at the moment is California-based semiconductor giant Intel.

Still, Arabzadeh says he wouldn’t mind a bit of competition in his own country.

The veteran engineer says his company has established research partnerships with organizations such as the National Research Council and several Canadian universities, including McMaster, Carleton, the University of Ottawa, McGill and the University of Toronto. But he says many post-secondary institutions shy away from teaming up with companies that don’t have a big name or an established track record.

“Hopefully, over time, as the company grows, we’ll be able to provide a more stable stream (of funding) for the professors,” he says. “That should hopefully turn the tide. I think over time, the type of work we’re doing is going to attract people.”

Canada needs more ventures like Ranovus producing cutting-edge technology if it wants to be a leader in the digital age, Arabzadeh says. Otherwise, he fears, the Great White North will become a branch-plant economy run by foreign-owned multinationals that export precious IP and the riches that go with it back to their home soil.

“With government support and the ecosystem support, we’re hoping to create maybe a couple of more companies like ourselves in this space in Canada,” he says. “I think that’s how we’re going to be able to turn this thing around. Or else we will be all farmers here ​– and the landowners will be outside Canada.”