Thank heaven for Michael Nobrega

As I looked around at the hundreds of people enjoying the patio of Toronto’s Richmond-Adelaide Centre last night, I couldn’t help but think of former OMERS CEO Michael Nobrega. The OMERS Ventures and OneEleven-sponsored event was called #111 Tech Social, named after the #111 Richmond Street West tech office space (the building is owned by Oxford, the real estate subsidiary of the OMERS pension plan). OneEleven is a tech startup accelerator for post-seed ventures, focused on bringing together some of Canada’s fastest growing tech companies and their founders; which makes them a natural to spearhead these kinds of gatherings.

 

That Toronto can pull together hundreds of “start-up” types on any given Thursday night doesn’t come as a surprise, but the now-retired Mr. Nobrega deserves substantial credit for our presence on this particular occasion.

It was he who had the courage to lead the charge within OMERS to create its own early stage venture fund. At the time, and I mean some 7+ years ago, it was meant to be a Pan-Atlantic Lifecycle investing vehicle co-managed and funded by OMERS and a Scandinavian pension fund. By “lifecycle”, the idea was create a mandate where you could fund a company’s seed deal, and then carry-on writing cheques right through to the later stage ($20 million) rounds. Being a pension plan with no particular investment hold period and endless financial resources, unlike a traditional VC fund, Mr. Nobrega argued that OMERS wouldn’t have to push their investee companies to “sell out early” due to the normal GP/LP fund dynamics.

Although the “Pan Atlantic” part of the concept died an appropriate death, the OMERS Board wasn’t deterred; OMERS Ventures was born. It was staffed-up with several high profile Canadian tech luminaries and quickly backed many of Canada’s best private companies. The team continues to evolve, and the mandate is always being honed. But if you believe the “proof is in the pudding”, I think one can already argue that the strategy is clearly working. OMERS Ventures III will likely raise third party LP capital this time, under the energetic leadership of John Ruffolo, just as Oxford and Borealis do in their respective asset classes. Mr. Nobrega retired from the parent entity two years ago, and others (key being Mr. Ruffolo and his senior MDs) have taken the idea and run with it.

It is now bigger and better than even he imagined, I suspect.

When you looked around last night, and recalled the huge financial success of their investment in Shopify (SH:TSX), for example, you might be forgiven for asking: “what was all the fuss about?” But there was fuss: it was seen to be a maverick move not that long ago. At the same time as CPPIB was refusing to allocate any meaningful capital to the venture space — not even Accel or Sequoia — here was OMERS funding the entire initiative. How could they both be right? I distinctly recall one U.S. Fund-of-Fund manager saying this in 2010 (see prior post “Exchanging notes on the CVCA conference” June 14-10):

We “see this from time to time”. “Pension funds usually decide to go direct at the top of market. And eventually shut it down again.”

With an exciting portfolio, clear brand recognition and some early wins, I doubt anyone is thinking about shutting it down. With cross-selling opportunities for Oxford/OMERS, the gratitude of the provincial Liberal government for helping to backfill the capital Ontario lost when the LSIF program was cancelled (see representative prior post “The great LSIF myth” July 2-08), and attention in Silicon Valley, that seems awfully unlikely at this point. Most of the young developers and marketing types who were in attendance last night don’t know it, by they have Michael Nobrega to thank. As do the other area funds who have raised capital in the years that followed. Canadian LPs might not be lining up to invest in the asset class just yet, but there’s no denying the community has momentum again for the first time in 15 years.

Momentum that was on full display last evening. Thank heaven for Michael Nobrega!

MRM
(photo credit: OneEleven)