Cisco to invest $150m in Canadian tech startups

Nitin Kawale - Cisco Canada

Cisco Canada president Nitin Kawale

Cisco Canada Thursday announced plans to invest $150 million over the next five to seven years in innovative Canadian startups, part of the networking giant’s growing investment in this country.

Under the Cisco Canada Innovation Program, the company will invest in companies of all stages directly, through venture capital organizations, and through incubators. The company will also make business planning and go-to-market support available to companies in which it is investing. The efforts, backed up by San Jose, are in keeping with Cisco Canada president Nitin Kawale’s focus on addressing lagging productivity here in Canada.

“Tremendous opportunities for growth and prosperity can happen if we accelerate Canada’s innovation engine. We believe in the tremendous potential of people here and the fantastic collaboration skills of Canadians, and we want to support the good work of companies advancing it,” Kawale said. “We’re investing in Canada’s innovation potential and supporting the growth of Canadian entrepreneurship.”

Although the program was just announced this week, Kawale suggested that some early recipients have already been selected, and in some cases, funds have already been committed to Canadian companies.

Federal finance minister Joe Oliver noted Canada’s fairly healthy economy, but acknowledged that the market for venture capital in Canada has been challenged over the last few years by low returns on investment, the reluctance of institutional investors to invest in early-stage innovators, the relatively small size of venture capital available in Canada, and a lack of experienced venture capital managers in this country. While taking time to point out the government’s own efforts to boost venture capital available to Canadian companies, he said that private-sector involvement, like that from Cisco, is also key.

“There’s no reason Canada should continue to lag our OECD peers in innovation. Cisco Canada is helping to build Canada’s prosperity,” Oliver said.

Hilton Romanski, senior vice president of corporate business development for Cisco, said the accelerating pace of innovation means that a single generation of people now may see many multiple generations of innovation come and go in the way they communicate and collaborate. He said the company’s investment approach is to “take the best new ideas, and mege them with real-world opportunities and capabilities.” He described Canada’s major verticals, especially natural resources, as “a great testing ground” for new technology ideas like the Internet of Everything.

“We invest very closely with companies that will be relevant to Cisco,” Romanski said. “We’re excited to be part of innovation that’s impatient in Canada.”

The announcement is, by no means, a channel-centric program. But neither does it exclude the company’s partner base, particularly at a time when many solution providers are looking at ways to either transform their traditional business model to one that involves repeatable services and in some cases product offerings. Cisco Canada channel chief David De Abreu said that transformation from a traditional solution provider model to a managed service model is certainly an example of innovation.

“There are lot of our partners who are very innovative, very creative, and have great ideas. We hope this is an opportunity not only to leverage what is going on here in Canada, but to drive that innovation faster,” he said.

He added that the company hopes the increased focus on innovation here in Canada will lead to more noise about the startup scene in this country.

“We’re excited because as proud Canadians, we think there’s a lot going on here, and we think more people show know about it. Let’s stir it up a little bit,” De Abreu said.

Cisco’s investment in Canada has been on the rise since a 2012 meeting between CEO John Chambers and Prime Minister Stephen Harper, after which the fast-talking executive famously called Canada “the best place in the world in which to do business.” More recently, the company announced plans to create 1,700 new research and development jobs in Ontario, and named its new Canadian headquarters in Toronto, slated to open in the middle of next year, as the home to an Internet of Everything innovation centre.