IdeaFlow 2002, which will be produced by OCRI and the Ottawa Capital Network, comes after a new study suggests that most venture capital deals in 2001 were follow-on financings, not new investments.

IdeaFlow is intended to educate young entrepreneurs about what angel and seed investors are looking for. Those idea-stage companies wishing to attend must be Ottawa-based, have an idea pertaining to the telecom, photonics or software industry, and have been in business for less than six months.

Venture Coaches partner Jaswinder Kaur believes IdeaFlow fills a niche for pre-VC companies.

"The idea came from feedback from the venture capital fair. I think there are a lot of needs that go unfulfilled for these kind of companies,” she says. "This will give them an opportunity to hear what angels are looking for.”

For StartingStartups' Doug Hewson, he is seeing between 60 and 100 companies per month requiring seed financing. Obviously, StartingStartups is not going to fund all of those, so an event like IdeaFlow should help fill the gap.

"I believe there is a financing gap for (entrepreneurs pursuing) the first $1-$2 million. It's the gap we're trying to fill,” says Hewson.

According to figures released by OCRI last week, Ottawa's high-tech community attracted $922 million in venture capital in 2001 on the shoulders of a burgeoning photonics industry.

The study revealed local photonics companies drew almost $480 million last year, as compared to software ($198 million), microelectronics ($116 million), telecommunications ($113 million), life sciences ($10 million) and professional services ($3.5 million).

There were a total of 53 venture financing deals last year, with 20 new investments and 33 follow-on financings. The $922 million represents a 29 per cent drop from the $1.3 billion raised in 2000, but it's considered a success in light of the downtrodden U.S. market.

According to Venture Economics, risk capital in the U.S. plummeted in 2001. Consider these statistics: on a year-to-year basis, the total amount of VC dispersed in the U.S. fell by a whopping 78 per cent in the third quarter of 2001. That tumble was even worse than the second quarter, when venture capital in the U.S. fell 68 per cent from the same period a year ago.

Sharpening the contrast between Ottawa's VC market and that of the U.S. is the American VC community's increasing fascination with Ottawa. Of the 53 deals completed in 2001, 21 involved American VCs.

OCRI president Jeffrey Dale believes Ottawa could use even more American money in 2002.

"We could always use more. Not only is the money helpful; the real value is in the network of contacts. Ottawa companies need to leverage those contacts,” he says.

With several groups of unemployed tech workers, the timing of IdeaFlow could be not better, says Dale. In fact, the event was originally supposed to happen later, but was pushed out the door early.

"It's been about a year since the first wave of layoffs. Severances are running out, people have been working for months on ideas and they're frustrated as to how to get their ideas in front of investors. What I want out of this session is to jumpstart the startup community,” says Dale.

IdeaFlow is slated for Feb. 12 at the Centurion Conference Centre on Colonnade Road. Assuming all goes well, there will be another such event in May.