Terry Matthews sounds off

He’s been knighted by the Queen, built a golf resort in Wales, set up an executive jet charter company and co-founded a film studio (coming to a screen near you is one of them: Jack Brooks: Monster Slayer). Billionaire Terry Matthews has moved a long way from running Mitel and March Networks.

But despite these distractions the outspoken entrepreneur still spends most of his time in Ottawa overseeing his networking and communications investments.

That didn’t stop him during an hour-long interview from complaining the Harper government isn’t paying enough attention to the IT industry.

Ottawa “doesn’t seem to put the emphasis in to helping companies the way it used to,” he said in his Welsh-tinged accent.

Taxpayers and some politicians think programs like the controversial Technology Partnerships Canada program “is an abuse of public funds, whereas in fact every industrial country helps to support research and development for the corporate citizens that are there. Because unless R&D is spent you won’t keep up, whatever business you’re in.” Instead of offering repayable R&D loans, companies spending on research and development here should get outright grants, he said, which they’ll give back in taxes from increased business activity.

But because other countries, such as Japan, France and the United States help their corporations more, “Canada is not the fertile ground that it once was.”

The change in direct support for industry is part of the reason Matthews is investing more outside this country, and partly because in his view other nations are more supportive of industry.

“Now, in some countries they go overboard on that commercial side,” he said. “France: Very, very active involvement by the government in all aspects of industry, helping to orchestrate, helping to guide, helping to fund. Japan: All over their industry … U.S.: [The] Commerce department is very active, very active. And if Canada is to be continued to be respected as a source of competitive goods and services, you have to spend money on R&D. We are well down in the [R & D spending] rankings around the world even though the country’s a fairly large country with a fairly large population.”

The rise of the dollar hasn’t helped, he admitted, while the election of a minority Progressive Conservative government here has “made it worse,” he said, largely because he believes it’s preoccupied with staying alive.

“I tried to get to the Minister of Industry, but I think all of the ministers are caught up with the problems of having a minority government. You can’t blame them … It’s just that right now it seems in my view not enough attention is paid and at a time when there is an incredible amount of activity in the world in next-generation networks, and this is an area of industry where Canada has shined.

“I mean look at Nortel. It’s not in good shape I would argue…I would say the whole area of networking and technology is not receiving enough attention from the [federal] government, and government attention and encouragement matters a lot.”

In an e-mail response, Industry Canada replied that Ottawa invests more than $9 billion a year in science and technology. In May, the Prime Minister announced a new multi-year strategy to guide federal support for technolgy to create a national competitive advantage, the statement said.

The government has also pledged to improve R&D support. The Harper government has promised $350 million for a new Centres of Excellence in Commercialization and Research program that will create a critical mass of expertise in priority research areas, the statement said, $11 million for a new business-led Networks of Centres of Excellence program that will support industry driven research networks in priority areas, $4.5 million for an Industrial R&D Internship program that will give 1,000 students a year opportunities to work on R&D projects of interest to firms ($4.5 million) and $48 million to strengthen research collaborations involving firms and colleges ($48 million).

Active year

Matthews’ complaints about the government notwithstanding, it’s been an active year here for the entrepreneur. Among other things, in February he lured Cisco Systems vice-president Greg Pelling to head an enterprise softphone startup he financed, NewHeights Software. NewHeights was then acquired by an OEM softphone maker, Vancouver’s CounterPath Solutions, with Matthews ending up as CounterPath’s chairman and largest shareholder.

Meanwhile, after a struggle, Mitel doubled its size by buying Inter-Tel, a U.S.-based maker of IP PBX systems for small and mid-sized companies.

As someone who has sunk millions into companies he chairs, Matthews describes himself as playing a “very active” role in their operations. “I’m dealing with them every day, almost like I’m an officer of the company, but I’m chairman,” he said of his new role at CounterPath. “They don’t pay me, but then I’m a big investor, right. It’s the same with Mitel.”

Over the years the connections he’s built in the industry are tough to match and makes good use of them.

It was Matthews’ persistence, for example, that got Pelling leave Cisco, a CounterPath customer. “Terry had been talking to me for a few years about coming up and working with him to set up something for the future,” recalled Pelling, the goal being to capitalize on the softphone’s potential in a SIP-based telecommunications world. “So Terry said, ‘If you come up here and help with a few these things, we’ll find a way to make this work if it makes sense.’”

Matthews is “a remarkable guy,” said Peter Allen, president and CEO of DragonWave Inc., a maker of broadband wireless gear for carriers which was financed through Matthews’ personal venture capital fund, Wesley Clover. DragonWave went public in April.

“He’s got lots of connections and lots of energy, and as a result of that I get into senior places in potential customers a lot quicker than I might do on my own.” For example, when British Telecom asked Matthews to give a speech at an executive retreat it was holding at the entrepreneur’s posh hotel in Wales, he invited Allen along to do some networking for DragonWave.

Matthews’ broad range of interests means “he can join dots together between things that often it’s impossible for any of us to do individually because we are narrowly focused.” One of those dots might be Solace Systems, a maker of content-aware routing software for providers that Wesley Clover is funding. Matthews finds it the most interesting of his startup investments.

Using the software, he said, service providers could charge customers for searching throught networks and delivering specified content to subscribers. Looking ahead, he predicts Canadian organziations are about to start spending on multimedia broadband IP products and services.

“My knowledge of this industry is that decisions are being made this year, and next year it will start taking off,” he said.