John Ruffolo’s Maverix Private Equity has welcomed a new managing partner, Michael Wasserman, as the private equity (PE) firm nears its initial close of approximately $350 million USD.
With the addition of Wasserman, new members to its investment team and advisory board, and more than half of its targeted $500 million fund in place, Maverix is ready to start making deals.
Wasserman joins Maverix after 17 years at PE firm H.I.G Capital Management, where he led its healthcare investment fund. Wasserman marks Maverix’s third managing partner in addition to Ruffolo and Mark Maybank.
The $350 million comes from anchor investors CAAT Pension Plan, British Columbia Investment Management Corp, Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CIBC) and Mattamy Asset Management, and includes investment from some family offices as well.
In an interview with BetaKit, Ruffolo discussed his plans for Maverix and how the fund is an evolution of his career in the Canadian tech and investment landscape
A full cycle of capital in Canada
Maverix is a slight departure from Ruffolo’s venture investment history. Rather than a pure tech focus, the firm is looking to invest in “traditional businesses” of around $100 million revenue in size, in the areas of healthcare, financial services, transportation and logistics, and retail. Maverix is also pursuing deals for a significant minority position of 20 to 40 percent.
While not tech-focused, Ruffolo is still coming at Maverix’s investing from a tech lens, looking for companies that are heavily utilizing technology.
Maverix’s thesis places it somewhere between a growth-focused venture fund and a traditional PE. “What I’m doing is a hybrid of venture and private equity,” said Ruffolo.The size and scope puts Maverix somewhere between growth-stage funds from firms like Inovia and Georgian and traditional PE funds that tend to provide later-stage capital or take controlling stakes in companies. It’s a fund thesis seen in the United States, but one Ruffolo feels is lacking in Canada.
“I’m not investing in anything new, I’m just importing that up to Canada,” Ruffolo said.
Ruffolo told BetaKit Maverix is looking for deals that may be too early for traditional PE firms, but also not a fit for the venture investing world, which has a heavy emphasis on the tech and innovation sector. Noting how Canada’s GDP encompasses a wide variety of sectors, with tech making up just a small portion, Ruffolo told BetaKit that Maverix’s goal is to fill the investment gaps in those sectors.
“How about the other 90 percent [of companies other than tech] that suffer the same fate, being sold to the United States?” Ruffolo lamented. “The only source of capital … is the US.”
Ruffolo touted the benefits of Maverix’s thesis for founders. Not being connected to any venture fund, Maverix claims it can provide startups a more fair market price for their equity, earlier than traditional PE firms. Maverix also avoids potential conflicts of interest caused by the same investors pursuing stakes in a company through two different funds.
“To create 10 Shopifys, we need a full cycle of capital at every stage so founders getting close to that level don’t get forced into bad decisions,” said Ruffolo.
While Ruffolo notes Maverix is set to focus heavily on non-tech companies, the first offer the firm has made is, notably, to a tech company. Ruffolo called the deal an outlier, emphasizing that Maverix intends to focus 90 percent of its fund on companies outside the tech space.
New focus, same approach
As a PE fund, Maverix appears, on the surface level, to be a departure from Ruffolo’s venture investing roots. However, Maverix is simply the next evolution in Ruffolo’s pursuit to fill gaps in the Canadian investment landscape – something he did when building OMERS Ventures, which helped support the likes of Shopify, Hootsuite, Wattpad, and Wave.
The new gap? The one between growth-stage venture investments and buyout-focused private equity funds.
Ruffolo said the idea to fill this gap came in 2016 when he was at OMERS, and became something that led him to help build OMERS Growth Equity. At the time, Ruffolo was leading OMERS Ventures but had already noticed the gap between late-stage venture and buyout private equity. At OMERS, Ruffolo was also never solely making venture deals; some of his investments, he told BetaKit, were already bordering on PE.
Realizing OMERS Growth Equity was going to be focused on late-stage tech companies, and feeling that space was already over-supplied with capital, Ruffolo decided to depart OMERS and launch his own firm.
“I tried to look at where the biggest mismatch [is] for the demand of supply and capital,” he told BetaKit.
Noting the immense growth in capital being invested in Canadian tech over the years, Ruffolo said, “Canada is more than just that one industry … and I’m just trying to skate to where the puck is going to be.”
A team of Maverix
Ruffolo’s play is supported by a notable team of investors. He co-founded Maverix alongside Maybank, who previously served as President and COO of Canaccord Genuity, where he led the expansion of their wealth management and international capital markets businesses.
Wasserman joins Ruffolo and Maybank as a managing partner of Maverix, bringing with him vast experience in the PE space having managed a diverse investment portfolio of healthcare business across stages, sectors and geographies.
“That opportunity in the middle … that’s what got me charged up the opportunity [Maverix has].”
Like its thesis, Wasserman is another Maverix American import. A Canadian who moved to the US and spent 17 years there with H.I.G, Wasserman only recently decided to return to Canada – in part to lead Maverix.
“That opportunity in the middle … that’s what got me charged up the opportunity [Maverix has],” Wasserman told BetaKit. “To have a relationship-driven, sort of venture growth equity firm that has the right skill set, the right mandate that could not only take these companies that were on the right growth trajectory but really turned them into … global leading businesses that are based in Canada.”
“I’m not going to convince a guy like that to come back and work for us if he doesn’t believe there is a hole in the Canadian marketplace,” Ruffolo noted in regards to Wasserman’s decision to join Maverix.
In addition to Wasserman, Maverix also recently brought on Peter Hass, formerly of OMERS Growth Equity, as associate partner. Hass joins an investing team that includes Layth Ashoo, John Mavriyannakis, Dr. Eric Hoskins, as well as Nagar Rahmani, formerly of Kensington Partners.
Rahmani was, notably, one of the first calls Ruffolo made when building Maverix. Speaking with BetaKit he noted her experience in both venture and PE and called her the perfect person for the Maverix team.
Maverix also recently brought on Jonathan Goodman, co-founder and CEO of publicly traded Paladin Labs, as its sixth advisory board member. The board also includes Arlene Dickinson, Jim Balsillie, John Bitove, and Peter Gilgan.
Despite his move away from tech company investing, Ruffolo, vice-chair of the Council of Canadian Innovators, told BetaKit he will continue to support the Canadian innovation landscape. “You will continue to see me in both worlds,” he said. “I’ll never leave it.”
Images courtesy Maverix Private Equity