Close to one-third of companies in Ottawa's wireless cluster are bootstrapping their operations rather than turning to outside sources of financing, according to a recent survey.

The 2003 Ottawa Wireless Cluster survey, released last week, found that 31 per cent of the cluster is funded by owners and founders, while 25 per cent is funded by various government programs. Only 11 per cent benefit from venture capital, while a paltry three per cent benefit from angel investment.

"Yes, there are a lot of people who are funding small companies and startups themselves, but, by next year, (people) believe they'll have made enough progress to hire people and have some money," said Herb Woods, chairman of the Ottawa Wireless Cluster, which co-sponsored the study along with the Ottawa Centre for Research and Innovation and Deloitte.

Woods pointed to the 29 per cent of wireless companies that have less than five employees. Next year, that number is expected to drop to 17 per cent as more companies expand, according to the survey.

But for now, too many people are working for equity in companies, Woods said.

"There are lots of people that have been working for six months (without a salary) and believe they can go without for a year-and-a-half (it if means successful development of their product).

"Things are starting to come around. People are getting funded and there are more orders (than before)," Woods added.

The survey also underlines how important government financing is, particularly for early stage companies, said Carol Paradine, a partner at Deloitte.

The Scientific Research and Experimental Development program was the most widely used at 36 per cent, followed by programs administered by the National Sciences and Engineering Research Council of Canada (25 per cent), which administers programs such as the Industrial Research Assistance Program.

Meanwhile, 17 per cent of funding came from Technology Partnerships Canada and 22 per cent came from other sources, including Communication Information Technology Ontario and the Ontario Research Network for Electronic Companies.

For Paradine, a pleasant surprise was the emphasis companies are placing on the retention and recruiting of staff. When asked by the survey to highlight the biggest contributor to success, respondents ranked "recruiting and retaining staff" third (48 per cent) behind "establishing a strong management team" and "accessing markets and customers" (both at 52 per cent). The top-ranking success factor was "obtaining funding" (59 per cent).