OMERS Ventures, the VC arm of the C$95 billion ($72 billion) Canadian pension fund OMERS, is accelerating an ambitious strategy to establish itself as a global platform.
OV is eyeing vistas in the U.S. and Europe with the goal of getting “feet on the street” in key tech hubs, Head of Ventures Damien Steel told Venture Capital Journal.
The strategy was put into action in January as the firm opened an office in Silicon Valley.
To run it, Michael Yang, formerly managing director of Comcast Ventures, was hired as a managing partner. He will be joined by Michelle Killoran, a principal who is relocating from Toronto.
Steel, tapped to lead OV in October, said Yang and Killoran will form the nucleus of a team that will “drive OV’s access to the best VC deals,” not only in Silicon Valley but across the U.S.
As a next step, OV will begin evaluating opportunities in Europe.
Steel expects this process to result in an OV presence in London, where OMERS and its private equity, infrastructure and real estate affiliates already have an office. As in Silicon Valley, a U.K. operation would focus on creating broad exposure to regional deal flow.
OV was founded in 2011 as a life-cycle partner to Canadian tech companies, making it one of the world’s only VC pools housed inside a major pension fund.
Steel says building a presence outside Canada marks a “natural progression” that will enable OV to diversify opportunities and become more “thematically driven.”
“OMERS Ventures has proven the model in our own backyard,” he said. “Now to really be successful, to really drive returns, we need to expand our reach and create Canada’s first global VC platform.”
The strategy’s testing ground is the U.S., where pension funds are not known for backing startups.
Steel says OV will introduce itself to U.S. entrepreneurs, explaining “just how special Canadian pension funds are.” He expects CEOs to be sold on the advantages of partnering with an investor “with experience managing a global portfolio of assets.”
Along with leveraging the vast resources of OMERS, OV’s activity south of the border will rely on a track record of investing like a “traditional private venture firm,” Steel said.
OV, modelled on VCs like Andreessen Horowitz, has a team outfitted with financial and operational skills, as well as knowledge of tech verticals of interest.
These capabilities, Steel said, have enabled OV to be agile, invest swiftly, take board seats and add value. “If we think a company only wants our money, we typically walk away.”
Another strength OV brings to its U.S. market entry is Yang, who, Steel says, possesses not only VC and operational credentials but experience establishing in Silicon Valley a similarly large organization, telecom giant Comcast.
Yang’s team will soon begin sourcing fresh opportunities that can add to OV’s U.S. portfolio.
Last year, OV led financings for two U.S. companies, decentralized marketplace OpenBazarr and internet search engine DuckDuckGo. It also invested in Contentful, a content infrastructure provider with both U.S. and European roots.
Benefits to Canada
OV’s strategy, which will also eventually include establishing a foothold in Asia, promises rewards for Canada’s tech ecosystem, Steel said.
That’s because a global platform will lend support to local companies looking to become world-class players.
The likely benefits include more access to talent, the “single biggest pain point” for Canadian startups, he said. Companies will also gain more access to top customer markets and acquisition opportunities.
Canada’s VC market saw its ninth straight year of growth last year, with C$4.3 billion invested, a nearly two-decade high according to Refinitiv data. OV led some of the largest financings, including for travel booking app Hopper.
Before joining OV in 2011, Steel was a VC and entrepreneur, holding senior investment roles at BridgeScale Partners and EdgeStone Capital Partners.
He became OMERS’ head of ventures with the 2018 departure of John Ruffolo, OV’s founder.