Toronto-based medical technology company VisualSonics is being taken over by SonoSite Inc., based in Bothell, Wash., in a $71-million deal, the companies announced Tuesday.

VisualSonics has developed a medical ultrasound imaging technology that has the potential to revolutionize the diagnosis of prostate and breast cancer because of the unprecedented high resolution it shows of the first three centimetres below the skin surface or within an organ.

VisualSonics' ultrasound imaging machines are in 600 labs and companies worldwide. .(VisualSonics)

"We can see things other clinical ultrasounds cannot," Visual Sonics CEO Anil Amlani told CBC News.

"You get unbelievable resolution," said venture capitalist Sam Ifergan, who owns Toronto-based Hargan Ventures.

"You can see down to 20 microns. You can see how the brain cavity in a three-day old mouse fetus are developing," Ifergan explained.

It's much less expensive than MRI and doesn't use radiation.

VisualSonics is "a great Canadian success story" that has changed both research and clinical medical worldwide in just over eight years, according Ifergan.

It was Ifergan's investment of $1.5 million over that time that helped take VisualSonics to where it became a takeover target.

He won't say how much his fund made, except that his investors are "very, very happy with their return."

Met over a jar of eyeballs

Ifergan came up with funding after an introductory meeting with VisualSonics founder Stuart Foster in 2002 in Foster's lab over a jar of eyeballs.

The jar was key to Foster's pitch for money, because he was then using an early version of the technology to image eyeballs.

"I remember that meeting, because it was fairly different," said Ifergan.

"He imaged that, and I was pretty impressed with the image. After that, I went to some people [in the research field] who said, 'wow, that's never been done before.'"

Foster, who is based at Toronto's Sunnybrook Health Sciences Centre, spent 20 years figuring out make the technology before building his prototype in 1998.

Multiple improvements led to the founding of VisualSonics in 2002 and the development of a technology used in 600 locations worldwide.

VisualSonics' manufacturing facility at Yonge Street and Lawrence Avenue in Toronto will remain in the city. (VisualSonics)

It's employed in Toronto at the Hospital for Sick Children in tumour imaging, at St. Michael's Hospital to measure the arterial wall and determine a patient's risk of cardiovascular disease, and has recently been approved by Health Canada for research into male infertility at Mount Sinai Hospital.

The technology has been instrumental in research into cardiovascular health, cancer, gene therapy and the evaluation of drug therapies.

"So SonoSite, which has the resources and the infrastructure … will be able to take this Canadian technology and make it available to all the people that are suffering today," Amlani explained.

But both Amlani and Ifergan said there could be many more success stories than there are.

Venture capital firms missing the boat

"I think the venture capital companies are missing the boat a lot in Canada," said Amlani.

"Canada has phenomenal research capability. Sunnybrook is the world's foremost research centre for high frequency [imaging]."

Ifergan agreed.

"What we've seen is the evaporation of early stage venture capital in Canada," he said.

"And it's very sad, because these are the companies that create leading edge technology and jobs in Canada."

He blamed some early-stage funds, especially labour-sponsored funds, which made "horrible" choices, "burned" their investors and now, with the downturn, there is a lack of funds available.

The manufacturing facility at Yonge Street and Lawrence Avenue in Toronto where 100 VisualSonics employees design and develop its extreme high-resolution ultrasound imaging systems will remain in the city.

The deal is expected to close in the next few days.