CTVglobemedia sale may spur hope for tech/mobile entrepreneurs

If you’re going to be wrong, this is the one topic to be wrong about.

The Canadian start-up and VC industry has taken it as gospel of late that Canada’s largest pension funds have almost universally pulled-back from investing in early stage tech and telecom. Attend any industry conference over the past 36 months, and that was the universal message, from both LPs and GPs. VCs can rarely get meetings about their next fund with most large domestic pension fund investors. In CPP Investment Board’s case, for example, they’ve worked through a Fund of Fund manager since 2005, despite having led such funds as Celtic House, EdgeStone Venture Partners and Lumira in the first part of the last decade.

That’s not to say everyone has left the space completely. OMERS has announced their plans to go direct in early-stage tech, with a 100 million Euro commitment to a Pan-Atlantic joint venture. But that appeared to be at the expense of their historic $25 million commitments to a wide variety of domestic and U.S.-based early stage VC firms, other than OVCF. As with their stated private equity strategy, they’re “going direct”.

Could the conference panels of the past three years be not entirely accurate?

It was with some surprise (read: delight) to see yesterday’s press release from the Ontario Teachers Pension Plan Board, titled: “Teachers’ sale of CTVglobemedia stake supports further investments in telecom, media and technology portfolio”. According to the body of the release, OTPPB anticipates receiving their proceeds of the deal ($375 million) when the deal gets through the regulatory hurdles sometime in mid-2011.

With about $1 billion a year invested by VCs across the entire country last year, $375 million could go a long way.

Historically, OTPPB had been very active in the tech and telecom space. As an LP, they’ve been behind such funds as Mosaic Venture Partners, JLA Ventures, and our Wellington Financial Fund III. OTPPB has also been a direct investor is many North American internet, tech and communications firms over the past decade, such as BorderFree, Entrisphere, Grocery Gateway, Potentia Semiconductor, SonicWALL, and Solace Systems.

Tech entrepreneurs have assumed of late, however, that OTPPB had turned off the tap for any and all new early stage deals — beyond follow-on rounds for their existing portfolio. Other than one Montreal-based drug discovery investment in 2008, little has been heard publicly about any VC-type direct investments since the beginning of 2007. Unlike other high-profile institutional investors, OTPPB even demurred when the calls went out regarding the Ontario Venture Capital Fund. They weren’t alone, of course, as other notable local names (BMO, BNS, CIBC, HOOPP, OP Trust, SunLife….) also stuck to their knitting.

On the private equity side, Ontario Teachers has been as busy and successful as ever. During the past twleve months alone, deals have been announced with Acorn Care, INC Research Inc., Munchkin, Simmons Mattress, etc.

Yesterday’s press release may not have been designed to arouse the excitement of hundreds of Entrepreneurs, Angels and VCs in the Province and across the country. It may well be that Teachers was merely reporting that they planned to use their CTV funds to support the existing portfolio of tech and telecom names. That would make sense, of course; prudent investors need to back their existing portfolio winners. But does that warrant a press release? For those who parse such things, the word “portfolio” can be taken two ways: the current portfolio, or the investment vertical.

Whether or not some of the $375 million will flow into the early stage ecosystem, OTPPB has confirmed their interest in the tech and telecom space. They think money can be made in the sector. And that, itself, is welcome news.

MRM