OMERS Ventures, the venture capital arm of the Ontario Municipal Employees Retirement System (OMERS), has created a new $ 750 million fund for investments in Europe and North America.
The capital vehicle is larger than the group’s previous European and North American funds combined. In 2019 OMERS Ventures announced a EUR 300 million fund targeting Europe (TechCrunch covered the launch of this here), and the Venture Group’s last North American fund had a $ 300 million capital pool in 2017 and the source of the funds from which it can invest in North American startups.
According to Damien SteelAs a managing partner at OMERS Ventures, the company invested approximately $ 100 million from the original European fund. The rest is now reserved for follow-up investments. Steel informed TechCrunch that he did not expect the entire amount to be used for this purpose.
The remaining difference, however, is somewhat insignificant, since the risk collective has a new capital pool of three quarters of a billion dollars that can be put into operation. According to Steel, OMERS Ventures “consolidated [its] Efforts and made a new transatlantic fund. “The company hopes that the shared capital will lead to a more coherent investment group than when two funds are created for different teams.
OMERS Ventures expects to spend approximately $ 200 million annually in Europe and North America, a pace that Steel says will resemble previous efforts.
The COVID era
I wanted to find out what Steel and the company are doing differently in the new era. Something new is a slightly different way of thinking about the runway. Instead of the usual 18-month expectation between rounds, Steel told TechCrunch that expectations and planning between capital events extend to 24 months or more – enough money to weather the current downturn.
Fortunately for Steel and his company, some OMERS portfolio companies are well capitalized, and the venture capitalist tells TechCrunch during a call that “the companies [his firm has] The companies invested in a have really benefited from the exceptional liquidity that has been available on the market for the past two years. Some of their startups have put a lot of money into it because they have probably raised too much money in 2019 and 2018. ”
The capital was cheap, Steel notes, and so many companies accepted the offer. The result? Many startups that are in the 2020 recession have well-stocked bank accounts. Of course, not everyone was raised before it got worse. The companies that didn’t fight.
Given that the new OMERS Ventures fund intends to invest in both North America and Europe, I wanted to know what is different between the two regions today as the COVID-19 pandemic continues to cause economic chaos. What was remarkable for me was the fact that Europe is going as well as it is. Steel noted that “the financing environment in Europe has remained more active than in the United States.”
He sees “healthy” activities in Europe around the A and B series. It is therefore perhaps not surprising that Steel TechCrunch said that the rating pressure for startups that is easy to find in the North American venture scene is not quite in Europe is so hard. Steel noted that a 20% and 30% decrease in valuation multipliers is common in America and Canada from previous levels, while “definitely less” in Europe.
For founders, it is probably to be welcomed that new economies of scale come together at all. OMERS Ventures expects eight transactions to be completed with its new fund within a month, which is a fast pace given its age.
Disclosure: OMERS Ventures has invested in Crunchbase, my former employer.