Loonie’s drop bad for tech startups, says venture capitalist

The plunge i n the Canadian dollar will have a longterm negative effect on the country’s tech scene, said John Ruffolo, chief executive officer of OMERS Ventures.

A weaker Canadian dollar relative to the greenback makes it much more difficult to attract and retain top-level tech talent in the country and makes fast-growing startups vulnerable to acquisitions from foreign players, Ruffolo said Tuesday at a conference in Toronto.

There are positives to the dollar’s drop, too, such as a boost in revenue for companies selling mostly in the U.S., but those benefits are shortterm, he said.

“There are lots of plus and minuses,’’ Ruffolo said. “Personally I think the minuses outweigh the pluses.’’

OMERS Ventures is the venture capital arm of the Ontario Municipal Employees Retirement System, one of the country’s biggest pension funds. Ruffolo has backed many of the country’s up-and-coming companies, including Hootsuite Media, Vision Critical Communications and Shopify.

The Canadian dollar is at its lowest in more than a decade as a worldwide rout in the price of oil undermines investor confidence in the economy, which is still heavily dependent on natural resources. The currency is down about 30 per cent in the past three years.

The dollar’s drop comes in the midst of a renaissance in Canadian tech. Ottawa-based e-commerce startup Shopify was one of North America’s best-performing tech initial public offerings in 2015 and U.S. venture capitalists are coming north to avoid missing out on deals.

Prime Minister Justin Trudeau pointed to technology as a key part of Canada’s economic future in a speech from Davos and provincial governments are starting to mandate computer coding in school curricula.

“You thought getting talent to either stay in Canada or to try and attract folks in the U.S. was hard? Good luck. It just got 40 per cent more expensive,” he said. “Does it make our Canadian companies far more vulnerable from an acquisition perspective? I think it does; history has shown that it does.’’