Avanindra Utukuri is thinking big. The 32-year-old president and chief technology officer of Nytric Ltd., in Mississauga, Ont., hopes to see his firm become a world leader in helping turn unique concepts into popular revenue-generating products.

Nytric, which employs 22 technology experts with skills ranging from hardware and software design to mechanical engineering, provides technical and development expertise to startups and more established firms. These companies seek out Nytric's help in taking unproven but potentially profitable product concepts through to market.

But Mr. Utukuri, an electrical engineer by training who started his first business when he was still in university, is wary of Nytric becoming "just another consulting company." That's why Nytric insists on taking a stake in its clients' successes - and exposing itself to risk in the process. In lieu of cash upfront, Nytric takes payment from its clients in the form of stock, or royalties on the sale of a particular product, or a combination of the two.

"We're proving that this business model works," says Mr. Utukuri, citing healthy financials: Nytric has been profitable over the past five years, has no debt, has been growing about 40 per cent year-over-year for the past three years, and will earn revenue this year of approximately $4-million, while investing $1-million in new projects.

Here, Mr. Utukuri discusses what his company considers when weighing innovative product ideas and potential new partners.

What do you look for in a company or an individual who comes to you with an idea and asks for your help in developing it?

The most important thing we look for is fit. How does their expertise and our expertise overlap? The best relationships we've had are with companies that have great marketing skills or channel relationships, but they've never run a technical team.

The next thing we look for is uniqueness. If you come to us with an Apple iPod and say, "We want to make this in red," that's not us, and that's not where our interest is. We look for the level of technical uniqueness. We want to take a chance.

Does a potential partner have to be profitable?

Of course not! In fact, most of our deals started off with one or two guys walking in the door and saying, "We've got this amazing idea, and we have a fantastic vision, and let us explain this vision to you based on the experience we've had in the past." That's a great start.

What kinds of products have you been involved in bringing to market?

A client from New Jersey came to me and sold me on the idea of a machine which would wrap knives and forks in napkins. At first I thought he was nuts - waiters and waitresses do that on the side.

But he laid out the whole business plan. From large restaurant chains to banquet halls to casinos to convention centres to hospitals -there are plenty of places where people are hired to do this, and are paid $8 or $9 an hour. We started to do the numbers and we realized that there is a real need for this. This is a totally unique product; there's no competition there.

There are other fantastic examples. ZAPiT Games came to us.

The founder of the company said to me, "We want to do a new kind of games console." And again, I thought they were nuts: why would you want to go after Nintendo, or Microsoft, or Sony?

But he said, "I'm not talking about a game console for kids, I'm talking about a game console for people like me. I'm in my mid-40s and I've never touched a video game. But I play Monopoly, Scrabble and Boggle and Yahtzee and all of these traditional board games. I want a cheap video game system [which will play games like these], and I want six simple joysticks, which my grandmother could pick up and play. Forget these complicated controllers."

So it's a game show in your living room. ... It's like an interactive board-game player. The concept is totally unique. Three years later it's in the stores. And they're ramping up production right now.

They've got 13 games done. It's been phenomenally received.

Another project we've helped launch is the [coin-operated] PGA Tour Golf video game, which you see in bars and restaurants, with the track ball. The CEO came to us when the company had two people and said, "I can market and sell, but I don't necessarily know how to do the technology."

We helped them do all of the electronics, and we helped them launch the project. That's one of our big success stories.

How long does it take to get a product to market?

It varies on the kind of project. They can range from eight months to three or four years. But because our relationships are very long-term, our clients tend to evolve their products and come up with next generations, and as they grow we tend to grow the team that's working on it with them.

What does the future hold for Nytric?
I think one of the big challenges in Canada is the lack of ability for companies to take risk. I find this all the time.

If you go to the U.S., the dumbest idea gets funded. And in Canada, having helped launch 20 companies over the past four or five years, it's amazing how difficult getting institutional money for really good ideas can be.

My long-term vision is to help the really good ideas that are coming out of Canada, and fund those ideas from an early stage.

Nytric can be a world leader in this. The real goal is to grow a great technology company through very interesting projects.

By Charles Finlay

From the October 16, 2007 issue of the Globe and Mail

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