Venture Capital

OMERS Ventures opens Silicon Valley office, won’t replace CEO position

In this file photo, Michael Yang, then managing director of Comcast Ventures, speaks during the Bloomberg Next Big Thing summit in Half Moon Bay, California, U.S. June 18, 2013. David Paul Morris/Bloomberg
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OMERS Ventures has opened an office in Silicon Valley, its first ever outside Canada, in a move designed to bolster its tech sector exposure.

Michael Yang, a former managing director at Comcast Ventures, will be managing partner of the office. Yang has over 12 years of experience in the venture capital space in Silicon Valley, with past exits including August, Automatic, BodyMedia and Healthline. Yang also spent three years as general manager of Yahoo’s e-commerce businesses, and as an early stage principal investor with Atlas Ventures in Boston.

In a release, the firm said that Yang’s addition would both raise its profile in the U.S. tech hub and provide tech industry expertise to Ontario Municipal Employees Retirement System (OMERS).

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Toronto-based principal Michelle Killoran, who was at Deloitte for three years before joining OMERS Ventures in March 2016, will relocate to the Silicon Valley office.

“We’re seven years old now as a group, so it’s taken us that long to get established, prove the business model, prove to OMERS that value that we could drive and that we could make good investments,” said Damien Steel, a managing partner and the firm’s head of ventures, who took over leadership of the fund after the September 2018 announcement that CEO John Ruffolo would leave the company at the end of the year. “It’s always been in the plan to go global.”

Talking Point

OMERS Ventures has opened a Silicon Valley office, its first outside Canada, in a show of its strong interest in the tech sector despite the high-profile departure last year of former CEO John Ruffolo. The new office will be run by Michael Yang, a former Comcast Ventures executive. OMERS Ventures will not appoint a CEO to replace Ruffolo. OMERS Ventures currently manages $800 million across 35 investments, a significant sum but a relatively small percentage of the $95 billion OMERS as a whole manages.

OMERS Ventures launched in 2011, and has grown to manage $800 million across 35 investments, with exits including Shopify and PasswordBox. The fund announced its intention to open offices in Silicon Valley, London and Singapore in early 2018.

The firm is not looking to fill the CEO role at OMERS Ventures, Steel told The Logic. “CEO, by definition, means the head of the whole enterprise, and OMERS is one enterprise,” he noted. “We have various investment classes across the enterprise, but we’re one organization and that’s important to continue to solidify.”

Ruffolo led OMERS Ventures for seven years, from its founding in 2011 until December 2018. A prominent player in Canada’s tech scene, he often played a significant role both through his founding of advocacy groups like the Council of Canadian Innovators and his own public comments.

For example, after investing US$10 million in DuckDuckGo, the privacy-focused search engine and Google rival, Ruffolo told The Globe and Mail, “We have been deeply concerned over the misuse of data, privacy and data sovereignty.”

Steel acknowledged that Ruffolo’s departure led to questions about whether OMERS was withdrawing from the VC space. The opening of the Silicon Valley office “hopefully shows … it’s the exact opposite,” he said.

Steel is now reporting to Mark Redman, OMERS’ global head of private equity. OMERS Ventures was brought into the pension fund’s private-equity division in October 2018, which Steel said “improves the line of communication” between its asset classes. “OMERS [private equity] invests in extremely established large companies, so allowing our portfolio access to those companies is a huge value-add, and for us, being able to help those larger companies think about innovative disruptors that are coming down the pipe that may affect their businesses is also a huge value-add to them,” he said.

The Canada Pension Plan Investment Board (CPPIB) has similarly linked its private equity and venture capital investments as it expands its presence in the VC space. CPPIB wants to invest $1 billion in venture capital funds, The Logic reported in December 2018, and the Toronto-based senior principal leading these efforts will be part of its private equity team.

“We will consider the startup space carefully, so that we understand the ideas and technology that may shape or disrupt our existing portfolio companies, and also so that we are ready to invest in these businesses at the appropriate phase of their growth,” Shane Feeney, the CPPIB’s global head of private equity, told The Logic at the time.

OMERS is one of Canada’s largest institutional investors, with over $95 billion in net assets as of December 2017. It manages investments in public markets, private equity, infrastructure and, through its Oxford Properties arm, real estate.

Steel said the fund did not have a ratio in mind for Canadian and U.S. investments. “Could I envision it being 50/50 down the road? Possibly, but there’s no hard and fast rule for this,” he said. However, he did say that U.S. investments would align with the firm’s interests in health care, augmented and virtual reality, blockchain, enterprise software and property technology.