When Canada’s tech sector produces its next giant-killer, you can bet John Ruffolo will have had a hand in it. As the chief executive officer of OMERS Ventures, the venture capital arm of the Ontario municipal workers’ pension fund, Ruffolo presides over a $200-million fund that’s offering big money to startups that just might become megaplayers with the scale and global reach of BlackBerry.
The lack of innovation by Canadian businesses is well established; we ranked fourteenth out of 16 countries on the Conference Board’s annual report card. So Ruffolo’s efforts to jump-start our startup scene with unprecedented amounts of cash for fledgling companies aren’t just noteworthy—they’re vital. As our resource sector awaits pipeline approvals and manufacturing falters, OMERS is investing in the future. The pension fund’s role in a record-breaking US$165-million deal to finance Vancouver-based social media platform Hootsuite and a $100-million deal with Ottawa-based e-commerce platform Shopify establishes it as a heavyweight player on par with U.S.-based VCs. Ruffolo borrows a little Olympic rhetoric to describe his strategy: “Own the podium in Canada. Because if you don’t, then nobody will care who you are.”
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In the startup world, everyone knows Ruffolo. But what he represents—a fix to Canada’s chronic lack of VC—should matter as much to Bay Street as it does to entrepreneurs. OMERS doesn’t just talk about innovation—it pays for it. Since launching OMERS’s venture capital arm in the fall of 2011, Ruffolo’s been inundated with pitches—some of them zany, like when he got pitched over the phone by an Italian restaurant looking for funding to sell a line of rice balls. Ruffolo had to decline: OMERS Ventures limits its investments to technology, media and telecommunications (TMT). “There are so many ones that are like, ‘Wow, that’s a really cool idea, but we just don’t invest in that,’” he says. “If the company is outside of the [TMT] box, we have to pass on the investment because we can’t add any value.”
The success rate of all those pitches runs at about half of 1%, he says—“a very, very low percentage, and it’s pretty much in line with industry.” But the courting works both ways. Ruffolo pursued Shopify for two years before they agreed to partner. “I’m proud to say that we ended up getting them,” Ruffolo says, recalling the frustration he felt when OMERS Ventures didn’t make it into the company’s Series B round of financing in 2011. “I was always telling the founder, Tobi, ‘You’re the black mark for us.’”
So far, the OMERS Ventures portfolio includes 20 companies, but that’s expected to grow: It has said it plans to announce a second, larger round of venture capital financing. The second round, which includes OMERS funds as well as funding from outside sources, will make it one of the largest active pools of directly invested venture capital money in Canada.
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A longtime partner with Deloitte, Ruffolo had been advising companies and venture funds in the TMT sectors for more than two decades when OMERS hired him to launch Ventures. The $65-billion pension fund wasn’t investing in venture capital at the time (it exited the space in 2008, discouraged by low returns and the high management fees charged by VC funds) but by 2011 it saw growing potential in the market and decided to get back in—through direct investments. The move made OMERS the first major pension fund in Canada with an in-house venture-capital arm. “When everybody runs the other way, to have the guts to see that—I thought that was pretty cool,” Ruffolo says. Pretty cool, and exactly what this country needs right now.