Royal Bank of Canada is expanding its efforts to finance Canada’s rapidly growing technology sector, hiring former senior Ontario Municipal Employees Retirement Systems venture-capital investor Sid Paquette to lead a new technology and innovation banking group.
“I look forward to working with a market-leading institution in this space and harnessing the power of our exceptional talent, industry insights and investments in this sector to create a value-add vertical that will help the technology industry accelerate its growth,” Mr. Paquette said in a statement to The Globe and Mail.
Canada’s largest bank has been one of the most prolific Canadian institutional financiers of the domestic technology sector since the dot-com boom. In recent years, it has funded venture-capital firms including iNovia Capital, ScaleUP Ventures, and its own former in-house venture fund manager, Information Venture Partners, which was spun off from the bank in 2014. RBC has also backed financial technology startups including Wave Financial Inc., League Inc. and Drop Technologies.
But the past two years have seen a renaissance in technology banking groups at Canada’s largest banks, boosting competition for a share of an expanding sector that has seen the emergence of heavyweights such as Shopify Inc., Lightspeed POS Inc. and PointClickCare Technologies Inc.
U.S. lenders Silicon Valley Bank and Comerica Inc. have commanded a large share of tech debt financings in Canada in recent years, but Canadian banks have pushed back. Canadian Imperial Bank of Commerce acquired Wellington Financial as the cornerstone of its innovation banking group in 2018. National Bank of Canada has been hiring to cement its position in the sector and to replace staff poached by rivals, including Bank of Nova Scotia. Bank of Montreal launched a technology and innovation banking group last April.
In hiring Mr. Paquette, RBC is adding one of the best-known venture-capital investors in Canada. “We’re excited to leverage Sid’s deep industry experience and insights to help deliver unique financing solutions and advice that will help our clients scale and be globally successful,” Greg Grice, RBC’s executive vice-president, business and financial services, said in a statement to The Globe.
Mr. Paquette was a managing partner and member of the founding team of OMERS Ventures in 2011, following John Ruffolo from professional services giant Deloitte to establish an operation dedicated to backing Canadian information technology startups. Under Mr. Ruffolo, who left OMERS more than a year ago, OMERS Ventures helped revitalize the domestic sector, backing many of Canada’s rising software stars.
Mr. Paquette was OMERS’ board representative for many of them, including League Inc. and Vision Critical Communications Inc. It’s unclear whether he will keep that role on OMERS’ behalf, as was arranged when he departed OMERS on Dec. 31. Mr. Paquette’s departure was one of a string of recent personnel changes within OMERS’ private capital investing operation, including last month’s exit of global private equity head Mark Redman.
While the bank declined to share specifics on the strategy for Mr. Paquette’s group or amount of capital he’ll oversee, it appears the scope will expand beyond venture capital. “At RBC we’re reimagining the role we can play and the value we can add across the broader spectrum of our clients’ growth journey,” Mr. Grice said. The unit, he said, “will focus on a more holistic approach to supporting our clients by complementing our financing offerings with industry-tailored business advice and solutions that go behind traditional banking to support their broader growth aspirations.”
Financing technology companies requires a shift in mindset for bankers who have traditionally been wary of startups that have few physical assets for securing loans, and can take years to turn a profit. But as growth in domestic banking gets harder to come by in the concentrated Canadian market, a flourishing technology sector offers a chance to build ties to new clients and eventually win business to advise on acquisitions and financings. Several Canadian banks have opened offices in U.S. technology hubs to help clients with cross-border plans. “We have a thriving tech sector that has tremendous untapped potential to bring to market the next great innovation and vector of economic growth,” Mr. Grice said.