The Globe and Mail talks with John Ruffolo, chief executive officer for the Ontario Municipal Employees Retirement System (OMERS) venture capital arm. Starting in 2011, OMERS started direct start-up capital investing—an “unusual” and “aggressive march” for a pension fund to take.
The topic: How Canada can keep competing on the global stage.
This is an excellent interview, shows how capital and manufacturing growth and government pensions interact, and gives Canadian policy makers some solid advice.
Two big-take aways: (1) Canada may soon be making a positive, “game-changing” immigration shift, and (2) Canada needs to be more like Sweden and Israel, less like Germany: make strategic bests in manufacturing, and don’t try to compete in all fields.
Naturally, the question is in the details: How do you adopt a strategic manufacturing plan that also protects one-self from manufacturing sector up and downs. At least Canada has energy to lean on for the foreseeable future.
From the must-read interview:
Is Canada indeed lacking innovation to become competitive, as some critics say?
I don’t think so. I think that purely from an innovation engineering part of development, I would put Canada up against anywhere in the world. When I’m down in the [Silicon] Valley, they talk about the Canadian engineers, particularly from Waterloo, [Ont]. I was stunned. This is from the top [venture capital] investors in the world.
Innovation isn’t the issue. The issue really is, how do we get more of these folks building companies, to get them the support to be successful. That support includes capital, mentorship, government support. Every country is trying to compete against Silicon Valley.
Right now, I would say the issue for Canadian competitiveness is that the days of Canada thinking we can compete in all industries, at all levels, are over.
With globalization, Canada is going to have to make very strategic choices of where it’s going to focus and innovative industries is one of those. It also means that you’re also not going to be able to do some things that traditionally Canada has supported. And that’s part of the problem [with convincing governments]. It’s very anti-votes. The voters right now tend to be in traditional industries.
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What should Canada do in terms of public policy to create more and better startups?
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But the bigger one they’re working on – and I think it’s is going to be far more effective – is looking at immigration policy. They’re working on two immigration policies that I think could be game-changing. One is called a startup visa, and the other one is called the immigration investor program.
Both are designed to get foreign capital into Canadian technology companies and to get more foreign talent here working in Canadian technology companies. One of Canada’s assets is its diversity of people. Now this to me is really smart. … Talent is the No. 1 issue for companies that are growing in Canada. We asked all of our portfolio companies what is the No. 1 issue that you want help from us on. And it was technical engineering talent. Every one. This is going to be key to our future.
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What countries are getting it right in terms of fostering innovation and global competitiveness?
Germany is one, but look at Israel. For a country that has such a small population, they are very focused. They are a big startup nation. They are strong in high technology, related to the military and defence. In 1989, when the wall fell, millions of Russian Jews, extremely well educated in the sciences, moved to Israel and it created the most massive influx of brain power in a very narrow area of their history. … A number of venture capital firms, largely U.S.-based, were attracted to come to Israel to provide the fuel necessary for these companies to grow.
You see it with advanced manufacturing from Germany, Israel in innovation and Sweden in telecommunications. Sweden very narrowly focused in on the wireless industry. Countries that don’t have the requisite population have no choice but to do that. If you are Brazil, China and the United States, do them all.
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