OMERS’ new VC fund makes first investment

OMERS Ventures, the pension fund's brand new $180-million venture capital arm, has made its first investment just a few weeks after launching.

Working alongside Charles River, a U.S. venture capital fund, OMERS is investing in Wave Accounting's $5-million Series A financing round. It's a company OMERS knows well after investing in the seed round back before the fund officially launched. (So call this the first official investment.)

Wave Accounting is a unique company. It provides free online accounting software to small businesses. Free, you ask? How so? Rather than charge its clients, Wave has signed up big advertisers who are dying to get their names in front of small firms because there are very few opportunities to do so.

And going forward, the firm hopes to make it easier to target ads at very specific groups. Maybe of the firms that use its software spend too much money on cell phone bills each month. They could get a direct ad from a telecom provider.

That OMERS is investing money in startups is a good sign. No doubt, other firms are still doing that, such as BlackBerry Partners Fund. But there is a real dearth of venture capital fundraising in Canada. In 2000, $5.9-billion was invested in 1,007 Canadian startups, according to Thomson Reuters. Last year, just $1.1-billion was raised by 357 Canadian firms.

To help fix that, the Ontario Liberals proposed a new venture capital tax credit in the election that just passed, and there were rumours that the credit could be as much as 35 per cent of the investment. The Liberals have since won, but they only have a minority government, so no word on where the proposed tax credit stands.