NRC Spin-Offs a Good Bet

Despite weathering a high-tech slump and a lengthy downturn in venture capital markets, NRC spin-off companies are proving they're here to stay. Over the past five years, dozens of new firms created from NRC science and technology have continued to attract investment while adding to the bottom line of the Canadian economy. 

Last year, 35 NRC spin-offs combined to earn over $96 million in revenue – a healthy $160,000 per employee – up 29 percent from about $75 million in 2005, according to an annual survey of NRC spin-offs.

"This shows that many of our spin-off companies are well on their way to sustainability," says Clement Langemeyer of NRC. "In 2002, the average revenue per employee was only $43,000, which means that NRC spin-offs were living off borrowed money. But when companies earn $160,000 per employee, they're not eating capital anymore. That's a very encouraging number," he stresses.

NRC has a long track record of fostering new companies. Since 1995, NRC has stimulated the creation of over 60 Canadian firms, spanning more than a dozen industrial sectors such as biotechnology, health care, computer software, advanced manufacturing, communications, electronics and information technology.

The 2007 survey – entitled Economic Impact of National Research Council Canada Spin-Off Companies – involved 35 NRC spin-offs, most of which have been tracked each year since 2003. They included 24 Ontario firms, five from Atlantic Canada, four from Western Canada, and two from Quebec. The survey, conducted by Guelph, Ontario-based Adventus Research, covered a 12-month period ending in December 2006.

According to the survey, in 2006, export revenues rose sharply from $64 million to $85 million – or 88 percent of total revenues. "That's gold, because it represents money flowing into Canada from abroad," says Langemeyer.

In 2006, total full-time employment decreased 13 percent from 698 to 604, due to downsizing at several companies and the disappearance of another. Despite the drop in employment, 2006 was on the whole a good year for NRC spin-offs, which attracted $63 million in new investment – an average of $1.8 million per firm. The biggest deals reported included one worth $22 million and two that raised $12 million. Overall, NRC spin-offs have collectively raised more than $400 million in investment since the beginning of 2002, notes Langemeyer.

"Companies like SiGe Semiconductor are doing extremely well," Langemeyer says. "SiGe shipped its 150 millionth chip in the first quarter of 2007." Other companies to watch are Novadaq Technologies, IMRIS and Zelos Therapeutics – a biotechnology firm that is sure to attract the attention of the large pharmaceutical multinationals," he concludes.

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