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If Kent Thexton's past is any indication, the Ontario Municipal Employees Retirement System Ventures portfolio will have a wireless ring to it.
Mr. Thexton's 17 years of experience in that industry naturally predisposes him, in his new role as managing director of the pension plan's venture capital investment arm, to keep an eye on telecom. But the gate is wide open for other promising technology, and media investments, he says.
"We're not getting ultra narrow on a specific segment in one of those markets, but really opportunistically looking at what Canadian entrepreneurs are building," said Mr. Thexton, who chairs the boards of i-wireless LLC and Redknee Solutions Inc. and is also a director of Sierra Wireless.
Given that Mr. Thexton has $200-million to work with at OMERS – as well as an undisclosed sum for a second fund that's being raised, thought to be in the $100-million range – it's no surprise his emphasis is on advanced-stage propositions.
Mr. Thexton's challenge will be to top last year's big scores, when OMERS Ventures dipped into Hootsuite's $165-million (U.S.) Series B and led Shopify's $100-million Series C rounds, respectively the first and second-highest fundraisers in 2013. "There is a lot of dry powder and opportunity to invest," he says.
Indeed, venture capitalists appeared to be much more active in 2013 – $1.96-billion invested in 204 firms, nearly a third higher than the prior year – although Mr. Thexton believes the numbers are skewed by the carry-over effect. Even so, he believes there's more to come.
"We're seeing an absolute ton of deal flow," he said. "There's no issue of where to put the money to work. It's selecting the companies we find the most compelling."
Three big themes on Mr. Thexton's radar are technology related to mobile devices, cloud computing and data analytics. The trick, especially when it comes to app development – where barriers to entry are low and critical mass is hard to come by – will be to separate the wheat from the chaff. "Now you can spin up an app, you can throw it on an app store and you're up and running in no time at all."
OMERS Ventures would almost certainly pass on early-stage apps, leaving that up to the smaller VC funds. But Mr. Thexton acknowledges the flurry of activity amongst budding developers is "creating that environment of entrepreneurialism."
The signs are especially positive for software manufacturers, second in money raised as a category only to industrial/energy firms last year, when the total equity invested grew more than 30 per cent to $557-million. In particular, Mr. Thexton likes the recurring revenue potential of on the enterprise side.