The firm, which opened in October, specializes in seed capital financing for early stage wireless and photonics companies. Its $50-million fund includes local start-ups Edgeflow Inc. and DPS Wireless Inc. A third company, which has been added to the fund’s local portfolio, will be announced next month.

Venture Coaches has already made its first move outside Ottawa, investing in a Toronto-based broadband wireless firm, which is addressing the last-mile segment of the broadband networking market.

The expanded focus will be directed from Venture Coaches’ Ottawa office for now, says managing partner Claude Haw. He expects to be doing a lot of travelling, however.

“I like spending a lot of time with these young companies,” says Haw. “The big advantage is that most of these companies are just hours away.”

Besides hunting around for investments in these cities, Venture Coaches partner Jaswinder Kaur says the firm will also look at opportunities in areas close to major centres such as Kitchener-Waterloo, west of Toronto.

“We see strong synergies in that area because of firms like Research In Motion and Bell,” she says.

Unlike Ottawa, which is a telecommunications centre, Haw says Toronto boasts more application software opportunities.

“Toronto, like Ottawa, has a lot of tech workers, but their strength is more on the software side,” he says. “My expectation is that we’ll see more in the applications space.”

Montreal and Quebec City, on the other hand, offer opportunities in the photonics space.

Quebec, in particular, might be a goldmine for photonics investments.

The Conference Board of Canada says the province offers more research and development tax breaks than any other province. Quebec City photonics firms also can apply for a 40 per cent payroll tax break.

Haw says the firm expects to have between seven and 10 firms under its wing before the end of the year. New investments in Toronto and Montreal will come out of the firm’s existing $50-million pool, rather than out of its next fund.

“We’re considering our second fund, but that’s still about a year away,” says Haw.

To stake out its claim in Toronto and Quebec, Venture Coaches will rely on existing relationships it has with firms located in the cities. High-tech public relations firm Hewson, Bridge and Smith Ltd. (HBS) will be partnering with Venture Coaches to help chart its course.

Gord Smith, executive vice-president of HBS, says Venture Coaches shouldn’t have too much trouble finding a niche for itself in much larger centres, such as Toronto and Montreal, because of the inherent mobility of the VC market.

“I don’t think an Ottawa firm going to Toronto is a big issue,” he says. “The whole VC area is pretty dynamic. It shouldn’t be an issue.

The expansion comes at a time when VC firms are being very cautious with the money they’re handing out. Haw says this only serves to bring some much-needed practicality into capital markets.

“Last year, a lot of companies were getting caught up in the headiness of the market,” he says. “The valuations are becoming more reasonable now. We’re seeing some very serious undertakings now.”

Haw also says a cautious VC market will benefit companies when the markets recover. Essentially, he says, if companies can make do with less now, it will ease their respective debt loads when investors open up their wallets again.