Canadian public pension fund Ontario Teachers’ Pension Plan (OTPP), with AUM of C$221.2 billion (US$173 billion), is planning to more than triple its allocation to venture capital to up to 10% by 2026. As a result, it will ramp up its investments in startups by at least US$12 billion.
Avid Larizadeh Duggan has been hired to head venture and growth equity investments in Europe, the Middle East and Africa at the Teachers Innovation Platform (TIP) and is looking to invest in disruptive tech.
The TIP venture capital portfolio, which launched in April 2019, led the growth in returns in the last financial year. Although at C$3.2 billion it represented just 2% of AUM, innovation assets posted a 16.3% return. The creation of the platform corresponded with a cut in OTPP’s allocation to hedge funds from 8% to 6% of AUM, indicating that the TIP is set to drive VC growth within the portfolio.
So far this year OTPP has invested US$620 million in venture capital with a multitude of transactions at early stage or growth stage with retail and consumer sectors absorbing the highest about of capital. Spurred by the disruption of the Covid-19 pandemic, its investments this year range from edutech and foodtech to artificial intelligence.
The first TIP investment was Elon Musk’s SpaceX. OTPP is undeterred by the technical teething problems in rocketry with its mind set on the growth potential of SpaceX's Starlink satellite internet constellation.
Other TIP targets focus on artificial intelligence applications in autonomous vehicles, energy storage and finance, data management, semiconductors and online tutoring – areas of market disruption that have been boosted by the pandemic.