John Ruffolo isn’t as well-known as some traders, however he’s very well-known in Canadian enterprise circles. The longtime head of Arthur Andersen’s tech, media, and telecommunications observe, he joined OMERS roughly a decade in the past when a former colleague turned CEO and introduced him aboard the pension big to create a enterprise fund.
The concept was to back the most promising Canadian corporations, and Ruffolo steered the unit into investments like the social media administration Hootsuite, the recently acquired storytelling platform Wattpad, and the e-commerce platform Shopify, amongst different offers. The final was significantly significant, provided that OMERS owned round 6% of the firm crusing into a 2015 IPO that valued it at roughly $1.3 billion at the time. Alas, owing to the pension fund’s guidelines, it additionally started steadily promoting that total stake, at the same time as Shopify’s valued ticked upward. (Its market cap is at the moment $130 billion.)
Indeed, after serving to OMERS subsequently get a progress fairness unit off the floor, an antsy Ruffolo left to launch his personal fund. Then got here COVID, and as if the pandemic weren’t attempting sufficient, Ruffolo additional underwent a harrowing ordeal final September. An avid bike owner, he got down to experience 60 miles one sunny morning on a nation street, and was knocked far off his bike by a Mack truck in an accident that shattered most of his bones and left him paralyzed from the waist down.
That variety of one-two punch would possibly drive somebody to the brink. Instead, six months and a number of surgical procedures later, Ruffolo, is present process coaching and remedy and intends to bike sometime once more. He is additionally very a lot back to work and simply taking the wraps off his new Toronto-based agency, Maverix Private Equity, which has $500 million to spend money on “traditional businesses” that already produce at the very least $100 million income and are utilizing tech to develop however might use an out of doors investor for the first time to essentially hit the fuel.
We talked with Ruffolo about the accident and his new fund this morning. You can hear that dialog here (it begins round the seven-minute mark, and it’s value a pay attention). In the meantime, following are excerpts from that interview, edited calmly for size.
TC: You’re absolutely drained of answering the query, however how are you doing?
JR: Well, when anyone says it’s nice to be alive, it is. I truly by no means knew how shut I used to be to loss of life, to be trustworthy, till about eight days after the accident. When I requested for my telephone, simply to variety of see what’s occurring in the world, there was 1000’s of messages coming via. And I’m like, ‘What the hell?’
People have been copying varied articles. I picked off the first one, and it stated, ‘John suffered a life threatening injury.’ And I’m variety of considering, ‘Life threatening? Why are they saying that? And the doctors came in and said, ‘Because it was. We thought that you were going to die in the first 48 hours.’ I subsequently spoke to some of the top physicians [in Canada], and so they don’t perceive why I didn’t die on influence. That variety of scared me a little bit, however I’m so glad to be alive. And my restoration is far forward of schedule. It was solely inside a couple of weeks the place I began feeling my legs once more.
TC: You have been mainly pulverized, but a recent piece about your restoration in The Globe & Mail notes that inside a month or so, you have been back to occupied with your new fund. Do you suppose you is perhaps . . . a workaholic?
JR: Some individuals name it silly. [Laughs.] For the two months, my first reminiscence was worrying about my household and stuff [but] I’ve group of biking associates — we’re known as Les Domestiques — who’ve dedicated to biking, and it’s a lot of of us who’re traders, CEOs of huge banks in Canada, we’re all shut associates, [and] all of them got here to cocoon the household to make it possible for nothing went mistaken.
So in a short time, all of these of us take over each aspect of the household, and the youngsters have been high quality, all people was high quality. I then had a lot of time in the hospital, and I do get antsy, and I began inserting the calls to the traders who have been committing to this fund pre COVID . . . I simply actually needed to inform them, ‘Hey, I’m not lifeless. All my schools are there. Are you continue to gonna be there once I get out of hospital?’
TC: Because they’re actually investing in you and your observe report.
JR: That’s precisely proper. And I gotta let you know, it’s an fascinating comparability. I’ve had American traders, and Canadian traders. American traders are very transactional. They’re very quick to return in in the event that they see a nice worth proposition. Canada is not the identical factor. In Canada, I’m extraordinarily well-known as an investor and there, it’s truly relationship-driven, which is each good and dangerous. It’s robust in Canada as a result of they’re extra conservative, nevertheless, they stick with you in dangerous occasions. In my case, each single investor, everybody that had dedicated on pre- COVID, got here in. Then one particularly doubled the measurement of the funding. They simply felt dangerous for me, and I used to be like, ‘Hey, dude, I will take that sympathy card. Anytime.’
TC: You additionally see a actual marketplace for a Canadian-led agency to spend money on Canadian corporations versus taking cash from American counterparts.
JR: So now this is going a little bit to the thesis, which is not a new thesis from a US perspective however is new from a Canadian perspective: the nice companies in the U.S., like an Insight [Partners], like a Madison Dearborn, Bain Capital, General Atlantic, Summit — we don’t have any of these in Canada. We have nice enterprise capital companies, and we have now nice buyout personal fairness companies. But what was actually taking place right here is the entrepreneurs who’re constructing nice companies should not actually tech entrepreneurs; they’re simply conventional trade entrepreneurs. And actually, all I’m doing is planting a Canadian flag and saying, Hey, we have now a Canadian agency that may lead or extremely take part in these offers [to help you scale that business].
TC: You’re drawing a distinction between old-line industries and growth-stage tech corporations, in different phrases, and also you’re going after the former?
JR: [To me] a true expertise firm is one that really builds the instrument units which are utilized by different companies to make them greater, quicker, and stronger and I’ve been investing in these corporations for 10 years with nice success, however there’s a huge oversupply of capital in these areas, significantly in the SaaS software program house. It’s simply not making mathematical sense on on the subject of a lot of these valuations. Meanwhile, on the subject of monetary companies, well being care, journey, no matter, these should not tech entrepreneurs however they’re enlightened. We’re not introducing expertise into the enterprise, they have already got it. But in a single case, with a journey firm we’re intently, they need anyone who understands the journey house and in addition who understands expertise and the influence as you scale globally.
The profile of the corporations that I’m speaking about have, on common, $100 million {dollars} of top line [growth], with flattish EBITDA, and that haven’t achieved any exterior financing with establishments. They’re rising at 20% to 50% a yr, however they actually need to turn out to be the subsequent billion-dollar firm.
TC: How a lot of these corporations do you suppose you possibly can personal and for what measurement checks?
JR: We’re 20% to 40% stakes in the enterprise, so I’d say a vital minority, and we’re slicing checks of $50 to $75 million (U.S.)
TC: There aren’t a lot of huge corporations in Canada, Shopify however. How do you get the corporations you propose to work with considering on a completely different scale?
JR: Canadians is perhaps a little bit extra conservative, however the irony is, take a survey and [you’ll see] what number of Canadians are operating large companies in the United States or in the Valley. It’s not inherent in Canadians [that they are risk averse].
Part of why I acquired into enterprise capital was I used to be so annoyed in the quantity of corporations that have been constructing merchandise however couldn’t even generate revenues. Since then, I feel we solved in Canada the zero to $10 million downside, then the $10 million to $100 million [challenge]. But beginning round 2016 or so, I began to see corporations that had $50 million, $60 million, $70 million in income beginning to plateau, and the subject was world scalability.
In the U.S., so many corporations could be a home firm and be a billion-dollar firm. In Canada, our market is too small; you’re pressured to promote on a world scale, and lots of Canadian corporations wrestle with that. So my focus now is that final half of the piece. How will we get these corporations from $100 million companies into $1 billion-plus?
source https://infomagzine.com/one-of-canadas-top-investors-john-ruffolo-is-back-from-the-brink-with-a-new-500-million-fund-techcrunch/
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