Recent reports that Canadian investment firm OMERS Ventures will be permanently withdrawing from the European tech market have taken some businesses and investors by surprise, and sent ripples of uncertainty through the industry. Although there are many questions as to why this financial giant has decided to exit the brilliant minds of Europe, the firm likely had very good reasoning behind the move.
First, it’s important to have a basic understanding of the firm itself. OMERS Ventures is a venture capital firm founded in 2011, and is owned by OMERS, one of Canada’s largest pension fund managers. Since its inception, OMERS Ventures has made 53 investments in various tech businesses. When the venture capital arm of the company shifted its focus away from Europe, it closed its London office, released a statement saying the market no longer aligned with their global investment thesis.
Understanding why this firm is pulling out of Europe requires contextual analysis. Specifically, the tech investment market can move very quickly, and there is no guarantee of consistent success year-over-year. This can make it a treacherous market for new investment firms, especially those with limited global experience or resources. The European market is renowned for welcoming startups from all corners of the globe, but the competition is fierce and the risk of failure is high. In this instance, it seems clear that OMERS Ventures opted to refocus its efforts away from Europe, in order to protect the overall health of the company’s portfolio.
Additionally, it could be argued that the global political and economic climate is significantly affecting the venture capital game currently. For example, Brexit has led to heightened levels of pessimism throughout Europe, which may have deterred some of Canada’s more conservative investment firms. Additionally, the emergence of technology giants such as Google and Microsoft have meant even greater competition for the talented European tech entrepreneurs who are looking for venture capital investment.
Ultimately, there is no denying that OMERS Ventures’ move away from Europe was a calculated choice that had likely been brewing for some time. Given everything the firm had invested in the European market, it is still likely to be an emotional decision. However, ultimately OMERS Ventures had good reason to exit Europe, likely in order to protect its overall portfolio and ensure the market climate was in their favor.
