The Ontario Municipal Employees’ Retirement System has made its first new venture-capital investment in Canada in nearly two years, backing an Ottawa remote-working technology startup that has experienced a surge in demand during the pandemic.
OMERS, one of the most active institutional investors in the Canadian startup space for much of the past decade, led a US$10-million investment in Tehama Inc., which spun out last September from information technology services provider Pythian Group Inc. The Business Development Bank of Canada’s industrial, clean and energy technology venture fund also backed the funding.
It’s the first Canadian investment for OMERS’s new US$750-million transatlantic venture fund, announced last month after a period of transition in the pension giant’s private capital group, including high turnover at its senior ranks. OMERS Ventures managing partner Damien Steel said last month that his group is determined to revive its reputation as a key venture investor in Canada after it “lost focus” on its home market amid international expansion efforts.
Tehama, which sells internet-based software that enables employees to remotely and securely access sensitive company information and enterprise applications, has seen a spike in interest since employers sent workers home in March.
CEO and founder Paul Vallée said Tehama has added nine customers since February – compared with three in the previous five months – and quadrupled its number of prospects. Existing customers, many of whom came over with the split from Pythian, have increased their usage by 67 per cent in the past two months. “I think there is a permanent change to the zeitgeist of our society to accept and even embrace working from home."
Mr. Vallée said he believed that the “emergency gold-rush phase” of new clients has likely passed as most organizations figured out initial solutions to remotely link their work-from-home employees. He said the company will now focus on expanding usage by its 160 enterprise customers.
It’s unclear to what extent employers will continue to support employees working from home after the pandemic. Last week, Waterloo software company Open Text Corp. said it wouldn’t reopen half its offices when the pandemic ends.
OMERS’s interest in Tehama pre-dated the pandemic and was fuelled by a broader trend that has seen software providers, including Microsoft and Amazon, offer more secure “virtual desktop” products whereby user information is stored not on their computer desktops but in the cloud, said Shawn Chance, a venture partner with OMERS Ventures.
“I had a strong thesis around how the future of work has to move to being virtualized … and decided Tehama was probably the best fit for a company we’d [back],” he said.
“What may seem obvious in retrospect came from a different line of thinking. Now it’s about understanding how this opportunity continues to play out [and] what the new normal looks like. Clearly COVID will have a lasting impact on how enterprises think of remote work. We think that will be a significant tailwind for companies like Tehama.”
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