Ontario Teachers’ Pension Plan (OTPP) and Boston Consulting Group (BCG) Digital Ventures are launching a Toronto-based incubator for tech companies, The Logic has learned.
The incubator, called Koru, will focus on helping private equity, natural resources and infrastructure companies scale rapidly.
The new incubator, called Koru, is the pension giant’s latest move into tech and it comes amid increasing competition with its peers. In August, The Logic reported the Caisse de dépôt et placement du Québec was planning a fund of up to $2 billion focused on “disruptive technologies.” CPPIB and OMERS have both announced new tech-focused divisions, as well as offices in San Francisco.
OTPP’s tech investments have been limited, but the pension giant is trying to change that. In April, it launched a late-stage venture capital department; in August, it announced a partnership with Sidewalk Labs, a Google sister company, to invest in cutting-edge infrastructure technology.
This latest move is even more ambitious. In addition to incubating new companies, Koru will work with firms currently in OTPP’s $201.4-billion portfolio, helping them generate ideas and build new digital businesses.
Koru will work with Ontario Teachers’ “portfolio companies around the world to generate ideas, validate and incubate them in market, and ultimately build new, innovative digital businesses that address customer frictions and take advantage of new opportunities across industries,” according to multiple recent job postings for senior leadership roles.
Teachers’ declined to answer any questions, including whether it’s filled the roles for job postings that have recently been taken offline.
BCG Digital Ventures, which partners with large corporations to help early-stage companies grow, posted the jobs. The firm operates in nine cities around the world, but does not list a Canadian location on its website. It did not reply to multiple requests for comment.
Koru is hiring six staff tasked with opening the Toronto office and building teams underneath them focused on sales, venture build, engineering and finance. The fund is looking for a head of venture build who will “provide overall guidance and support to individual ventures in the areas of infrastructure, customer operations and business operations stand-up,” according to the job posting, and help companies “set up and scale rapidly into high performing start-ups.”
The head of product development will be responsible for hiring a team of designers and product managers, with the goal of launching multiple companies per year.
The heads of engineering and sales are tasked both with building Koru itself, and with working on companies the fund is incubating.
The finance controller will be responsible for “advising senior leaders on financial performance and driving results for our disruptive early and growth stage start-up initiatives.” They will also be tasked with developing controls and policies for all of Koru and assisting in commercial negotiations.
Koru will enter an increasingly crowded field of incubators in Toronto, including the Creative Destruction Lab, Ryerson University’s DMZ and Next Canada.
The pension and consulting giants mention OTPP’s involvement as a competitive advantage. The postings call Koru the “first true venture incubator formed by an institutional investor in North America.”
The focus on infrastructure and natural resources plays to one of Olivia Steedman’s strengths. Steedman, who leads OTPP’s new innovation department focused on late-stage venture capital and growth equity investments, was previously a managing director of infrastructure and natural resources at the pension plan.
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OTPP’s push into tech follows similar moves by other Canadian pension plans. In December 2018, The Logic reported that the Canada Pension Plan Investment Board (CPPIB) was looking to invest up to $1 billion in VC funds. The Caisse de dépôt et placement du Québec is also planning a fund of up to $2 billion focused on “disruptive technologies.” Both CPPIB and the Ontario Municipal Employees Retirement System announced new tech-focused divisions, as well as offices in San Francisco, this year.
Koru will face particular competition in the private equity and infrastructure spaces. Last week, the Financial Post reported that CPPIB and the Caisse are investing a combined $500 million into Northleaf Capital Partners with a focus on those two areas. Northleaf has a solid track record of picking promising technology companies in the past. It was a relatively early investor in both Shopify and Top Hat.