Our startup community has a problem: too many young companies are looking for too much money. Strategic investment is becoming part of the solution.

There are literally dozens of companies in the region that have raised a few hundred thousand in seed funding and now need $2 million or more (sometimes a lot more) in follow-on funding to finance the rollout of their main product. My estimate is that there will be demand for more than $100 million over the next two years.

Most of these companies are hoping to tap investment from venture capital funds, but the region’s startups are on track to raise only $30 million to $40 million in annual VC funding. Even that level is stronger than what we’ve seen recently. Obviously, there’s going to be a shortfall.

There are signs that some Atlantic Canadian companies are looking at finding investment from established companies rather than VC funds. These are known as strategic investments, because the two companies share strategic goals.

Fredericton-based Atlantic Hydrogen Inc. recently took on an investment of more than $5 million from Halifax-based Emera, the parent of Nova Scotia Power Inc. and which has more than $7 billion in assets. AHI will use the money to develop a natural gas-treatment facility at Emera’s Bayside generation plant near Saint John, removing carbon from the fuel so it burns more cleanly.

Shortly before AHI’s announcement, aioTV, a company based in Halifax and Denver that offers video over several different platforms, raised $8 million by selling a 44% stake to UTStarcom Holdings Corp., a publicly listed maker of broadband equipment and solutions for cable and telecom operators.

In those two deals, more than $13 million has flowed into the young growing enterprises. That’s more than all the VC investments in Nova Scotia in 2011, and it’s more than the Nova Scotia government is contributing toward a data analytics centre in Halifax. It’s a significant amount of money for young companies.

The beauty of strategic investments is that they’re packages of money wrapped in professional expertise. They always have the benefit of the younger company gaining the technical and marketing advice of the larger company.

AHI CEO David Wagner, whose company has previously raised $32 million in capital but never took VC money, says he prefers strategic investments because of their mentoring potential and access to professional capability. And aioTV hopes to improve its global sales from UTStarcom’s network of contacts not only in China but also in Southeast Asia.

These sorts of strategic deals are a dream come true in terms of regional development because they leverage private investment from a minimal (or no) contribution from the government. In the case of aioTV, Innovacorp invested $1 million in January, and now eight times that amount is coming into the company to build up development and marketing teams in Halifax.

The province’s original investment, meanwhile, has increased in value because of the new funding. What’s more, a Chinese multinational now has a link to Nova Scotia and will no doubt learn more about the province.

Is there a downside to strategic investments in the broader scheme of things? Experts in the field say that there is a potential problem, and it’s that the interests of the larger company don’t always match those of the startup or its early investors (then again, the aims of a VC fund don’t always mesh with the startup’s either).

In particular, the startup will eventually want to exit, and the presence of a large corporate investor could complicate matters. It could restrict the pool of potential buyers because the larger company would be reluctant to sell the owner of hot new technology to a competitor. For example, if Ford buys a sizeable stake in your company, you can scratch GM off the list of possible buyers.

Such concern is nebulous compared to the advantages that these deals can bring to the region. We’re probably not going to go through many months with two strategic deals, but we’ll likely get a smattering of them in the future.