Why Innovation Matters - 16:9
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Why Innovation Matters
OMERS PENSION FUND OVERVIEW
• Founded in 1962
• One of Canada's largest defined benefit pension plans, with $95
billion in net assets
• Offices in major cities across North America, the U.K., Western
Europe, Asia and Australia
• Originating and managing a diversified portfolio of investments in
public markets, private equity, infrastructure and real estate
OMERS HAS A DIVERSIFIED BALANCE SHEET
2017 Asset Mix Geographic Distribution
PE/VC
Public Canada
Equity United
Real States
Estate
Rest of
Fixed Infrastructure
the
Income Europe World
OMERS VENTURES Investment Focus We invest across North America and beginning to target Western Europe. We are a lifecycle investor – patient, high value-add capital Investment Philosophy Interested in technology companies with market disrupting potential, using an entrepreneur-first approach How We Leverage The Other 99% OMERS brand goes a long way in Canada. Helps get in the room with hottest companies but we don’t rest on that. Work closely with Capital Markets, Private Equity, Real Estate and Infrastructure teams to identify and assess opportunities, and then support our companies. Constantly learning how to better utilize the OMERS worldwide portfolio and ecosystem OMERS Ventures has deployed over $500M into what we believe are top technology companies
OMERS VENTURES CAPITAL RAISED BY OUR PORTFOLIO COMPANIES
Technology is disrupting virtually
all major industries, faster and
broader than ever before
The Industrial Revolution of the 18th century is credited with transitioning the economy to modern production methods
However, the Industrial Revolution never stopped, it only
sped up with accelerating waves of innovation
6th wave
5th wave
Waves of Innovation Sustainability
Radical resource
productivity
Innovation
4th wave Whole system design
Biomimcry
Green chemistry
Petro Industrial ecology
3rd wave chemicals Renewable energy
Electronics Green nanotechnology
Aviation
Electricity Space
2nd wave Chemicals
Internal
combustion
Steam power engine
Railroad Digital Networks
1st wave Steel Biotechnology
Cotton Software
Information
Iron, Water power
technology
Mechanization, Textiles
Commerce
1785 1845 1900 1950 1990 2020
Sources: The Natural Edge Project 2004
Disruptive Technology is Here to Stay
2018 2016 represented
$1.06T $880B $850B $770B $450B
the first year where
the top 5 public
companies by
market cap were all
in the technology
segment
Sources: Visual CapitalistIn the past 20 years, vertical technology disruption has caused the downfall of incumbents in several industries Retail News TV/Film Transportation Lodging
• $870 billion USD market cap
• 533% increase in market cap in last 4 years
• $178 billion USD revenue in 2017; Germany is 2nd
biggest market with $17 billion USD in sales
• Over 300 million users, 100 million of which are Prime
users
• 49% share of US retail ecommerce in 2018
• 566,000 employees
• More than 100,000 warehouse robots
3,500 U.S. retail store closures in 2017 attributed
to Amazon’s total retail growth
Sources: Statista, NY Times• $455 billion USD market cap
• $41 billion USD revenue in 2017
• $16 billion USD net income in 2017
• 2.5 billion people use at least one of Facebook’s apps
• 300 million photo uploads per day
• 60% decline in # of people working in US newspaper
industry since 1990
• 30,275 employees
$20 billion in ad revenues for Facebook in 2018,
double that of all US print newspapers
Sources: Statista, Zephoria, TechCrunch• $154 billion USD market cap
• $27.4 billion USD revenue
• 130 million Global subscribers
• 6,000 titles in the US (30% TV Shows)
• $8 billion spent on original content in 2018
• 700 original TV shows and 80 original films in 2018
• 112 Emmy nominations in 2017
• 5,500 employees
10% decrease in U.S. cable subscriptions since 2012 vs.
more than 100% increase in subscription for Netflix
Sources: Statista, Comparitech• $62 billion USD current valuation
• $21 billion USD raised to date
• >600 cities, 78 countries
• 75 million riders (48 million projected adults expected
to use Uber in 2018)
• 3 million drivers
• 10 billion rides taken to date (15 million average daily
trips)
• $20 billion USD gross bookings in 2016
• 19,000 employees
Taxis and rental cars took up 90% of the US business
traveler market in 2014, today it’s 27%
Sources: Statista• $31 billion USD current valuation
• 150 million users
• 640,000 hosts
• 4 million listings
• 65k active cities, 190 countries
• 24 million projected users in Europe by 2020
• $1.7 billion revenue in 2016
• 3100 employees
Airbnb now has 4 million listings, more than the
top five hotel brands combined
Sources: Statista, BizjournalsThe next wave of disruption is horizontal in nature, and
bound to impact numerous industries simultaneously
"By 2100, our destiny is to become like the gods we once worshipped and feared. But our tools will not be magic wands and
potions, but the science of computers, nanotechnology, artificial intelligence, biotechnology and quantum theory.“
- Dr. Michio Kaku, Theoretical Quantum Physicist
Advances in artificial Blockchain and Future of Quantum Computing Synthetic Biology and
intelligence and robotics distributed ledger Transportation will will revolutionize data artificial intelligence will
will change a range of technology will change change mobility, analysis and allow for help prolong life and
industries such as any business model that logistics and exponential gains in create artificially
manufacturing, energy, involves intermediaries infrastructure. computing power. developed organisms.
healthcare, etc. todayARTIFICIAL INTELLIGENCE & ROBOTICS
Overview
Wave 1: Wave 2: Wave 3: Wave 4: ??
Pure Research ML Infrastructure Applied AI
Never commercialized / Limited commercial Industry/category specific ??
pre-revenue acquihires traction but acquired end-user applications
Description before reaching scale
Examples ??
18
OMERS PowerPoint TemplateARTIFICIAL INTELLIGENCE & ROBOTICS The evolution of Atlas
ARTIFICIAL INTELLIGENCE & ROBOTICS The evolution of Atlas
ARTIFICIAL INTELLIGENCE & ROBOTICS The evolution of Atlas
ARTIFICIAL INTELLIGENCE & ROBOTICS
Real life examples
Siemens has been using neural networks to monitor its AI can increase the relevance of Using AI, Amazon has created a store with no
steel plants. It also opened an AI lab in Munich recently recommendations for client resulting into lines and no checkouts.
evaluating the feasibility of new ideas. a higher chance of securing a sale.
In March 2017, Domino’s Pizza announced a pilot program in Robo-advisors are moving towards group plans in an
Europe using autonomous robots to deliver pizza. effort to disrupt the employer-operated pension industry.BLOCKCHAIN
Overview
• Blockchain is an open, distributed ledger that can ICO Mania
record transactions between two parties efficiently and $8B 140
in a verifiable and permanent way $7B 120
• First big use case is bitcoin which was launched in a $6B
100
white paper, however several blockchain-related $5B
80
startups have launched since 2013; many with $4B
60
applications outside cryptocurrency $3B
40
• Blockchain is disruptive for a number of reasons: $2B
▪ Transparency $1B 20
▪ Efficiency $0B 0
Dec-17
Mar-17
Apr-17
May-17
Aug-17
Mar-18
Apr-18
May-18
Aug-18
Jan-17
Jun-17
Oct-17
Nov-17
Jan-18
Jun-18
Feb-17
Jul-17
Sep-17
Feb-18
Jul-18
▪ Security
Total Amount Raised ($M) Number of ICOs
Sources: CoinscheduleBLOCKCHAIN Real life examples • An emerging group of startups are re-imagining existing Internet infrastructure using blockchain technologies • Leveraging the distributed power of the network, these organizations are developing products and services intended to unbundle or eliminate many of the centralized applications that consumers and businesses use
TRANSPORTATION
Overview
The Mobility industry is undergoing a wave of massive change driven by four main factors.
Autonomous Connected Electric Shared
✓ Increased safety, changing travel habits and more efficient logistics will impact many industries
✓ Proprietary data assets which can assist in autonomous navigation will see rapid increase in value.
✓ Gradual shift to electric fleet will drive demand for charging infrastructure.TRANSPORTATION
Real life examples
McKinsey estimates that self-driving vehicles could Fewer younger people getting a drivers license - % of 20-24 yr Suncor is testing driverless trucks at its main oil
eliminate need for 5.7 billion square meters of parking olds fell from 92% in 1983 to 77% in 2014, a trend likely to sands mine in Fort McMurray
space in the US alone continue with the rise of Mobility-as-a-Service
German government taking steps to ban sale of NYC connects ~$2B in traffic violations per year - Self-driving cars will
internal combustion engine vehicles by 2030 result in fewer traffic violations, reducing police services revenueQUANTUM COMPUTING
Overview
✓ A Quantum system replaces classical bits with quantum
qubits
✓ Qubits follow the superposition principle and can exist as
“0” and “1” at the same time
✓ Using qubits instead of bits, with a single input one could
process all the possible combinations of “0” and “1”’s in a
string at the same time
✓ Certain types of problems could be solved much faster
than any classical computerQUANTUM COMPUTING
Applications
Quantum computers empowering machine learning by enabling AI Complex financial modeling and risk management within Calculate traffic flows, identify most efficient
programs to search through gigantic datasets, impacting every the financial industry (Monte Carlo Simulation) routes, and optimize routing for retail
industry deliveries
Create, simulate and model molecular structures e.g. D- Ensuring a set of satellites observe a large fraction of a
Wave solved the puzzle of how some proteins fold in 2012 coverage area as satellites change positionSYNTHETIC BIOLOGY
Overview
2002 2013 2017SYNTHETIC BIOLOGY
Real life examples
Scientists successfully replicated the entire Scientists created Syn3.0, a man-made synthetic Harvard used a gene-editing tool (CRISPR) to edit
human genome as 23,040 different fragments bacteria. It is smaller than any other found in pig DNA, creating organs for human transplant.
of cloned DNA. nature.
Genetics to develop ideal DNA genome sequencing to customize
efficacy in pharmaceuticals. healthcare.What are the impacts of these disruptions
There are many… • Privacy concerns? • Democratization of knowledge? • Rising unemployment? • Workforce flexibility? • Increased inequality? • Global interconnectedness? • Geopolitical unrest? • New market opportunities? • Continued rise of nationalism? • Sustainable/self-sufficient growth? • Longer life expectancy? • Increased transparency and safety?
Increased Life Expectancy
Life Expectancy at Birth (Average for Both Genders) The Price of Old Age
90 1200
In terms of costs, longevity risk in some developed
80
Economies far outstrips natural catastrophes.
1000
70
60 800
LEGEND
50 U.S.
600
U.K.
40
Netherlands
30 400
Canada
Switzerland
20
200 Germany
10
0
0
1950 1960 1970 1980 1990 2000 2110 2020 2030 2040 2050 2060 2070 2080 2090 2100 Longevity Natural
Catastrophe
Source: Risk Management Solutions
Sources: Statista, ZephoriaRising Unemployment Sources: Federal Reserve Bank, World Economic Forum
Does Sophia need retirement benefits?
The OMERS Investment division it attempting to prepare for
upcoming disruption by first becoming experts ourselves
EXAMPLES
Latest trends in Potential disruptors to Innovation investing Insights and
Impact of Blockchain
cloud computing portfolio companies through PropTech fund knowledge sharing
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