{"id":646039,"date":"2026-05-03T23:44:09","date_gmt":"2026-05-03T23:44:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/646039\/"},"modified":"2026-05-03T23:44:09","modified_gmt":"2026-05-03T23:44:09","slug":"omers-other-canadian-backers-sitting-on-massive-xanadu-stock-returns-but-they-cant-sell-yet","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/646039\/","title":{"rendered":"OMERS, other Canadian backers sitting on massive Xanadu stock returns \u2013 but they can\u2019t sell yet"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

The Xanadu company office in Toronto.Eduardo Lima\/The Canadian Press<\/p>\n

When Christian Weedbrook founded Xanadu Quantum Technologies Ltd. XNDU-T<\/a> a decade ago, he was determined to raise as much of his financing in Canada as possible. Some investors told him he was wasting his time. \u201cI thought, \u2018Maybe it\u2019s true, but why don\u2019t we see how close we can get to that ideal situation,\u2019\u201d he said in an interview last week.<\/p>\n

Canada\u2019s startup financiers are happy the Australian expatriate stuck to his plan. Xanadu stock has had a strong run<\/a> since it went public in late March<\/a> by combining with a Nasdaq-listed special-purpose acquisition company. It closed up 24 per cent on Friday, giving the quantum computer developer a market capitalization of US$10.8-billion. Xanadu is now Canada\u2019s fifth most valuable public tech company.<\/p>\n

While Xanadu\u2019s early investors are subject to a lock-up and can\u2019t sell until late September, some of their paper returns at the moment beggar belief.<\/p>\n

Ontario Municipal Employees Retirement System led Xanadu\u2019s first two financings through its venture capital arm, investing less than US$30-million. That stake is now worth US$1.45-billion. To put that in perspective, the pension giant\u2019s top public stock holding on Dec. 31 was an US$862-milllion position in Nvidia Corp. OMERS\u2019s Xanadu stake is worth more than its combined holdings in Canada\u2019s Big Five banks, JPMorgan Chase & Co. and Mastercard Inc. on Dec. 31.<\/p>\n

The magnitude of its Xanadu gain \u201cis wacky,\u201d OMERS chief executive officer Blake Hutcheson said in an interview. However, he added, \u201cI\u2019m keeping perspective. It\u2019s on paper and it\u2019s locked up, so I don\u2019t want to get overly zealous. But it\u2019s proof\u201d of OMERS\u2019s thesis in the early 2010s that it could generate 15-per-cent returns over 10 to 20 years from venture capital.<\/p>\n

Other early Xanadu backers are sitting on massive unrealized gains. Montreal-based Real Ventures\u2019 2017 fund, which raised $150-million, put less than US$10-million into Xanadu; that stake is now worth US$668-million. If that gain holds, Real\u2019s investors and partners will share a giant windfall. <\/p>\n

The same is true for Toronto\u2019s Golden Ventures; its $40-million Fund II has US$493-million worth of Xanadu shares. Two other Toronto VC firms that invested in later financings could return their entire funds on their Xanadu holdings alone: Georgian\u2019s US$550-million Fund IV has US$1-billion of Xanadu stock; Radical Ventures\u2019 stake from its second, US$350-million fund is worth US$430-million.<\/p>\n

They are among 33 locked-up Canadian investors in Xanadu, according to securities filings. The list features three banks (Bank of Montreal, Canadian Imperial Bank of Commerce and Royal Bank of Canada), hedge funds (Polar Asset Management Partners and MM Asset Management), Business Development Bank of Canada, plus several other funds. It also includes prominent Canadian tech entrepreneurs\/investors Michael and Richard Hyatt, Michael Serbinis, Dennis Bennie, Anthony Lacavera and Daniel Debow, as well as ex-Manulife CEO Donald Guloien. Many are associated with Creative Destruction Lab, the University of Toronto-based accelerator that accepted Xanadu when it was just an idea.<\/p>\n

\u201cXanadu\u2019s success is a massive win for the Canadian ecosystem, proving we can scale world-class deep technology right here while delivering the kind of liquidity that fuels the next generation of founders,\u201d Michael Hyatt said. \u201cWhile this is a great milestone for early backers, I\u2019m convinced Xanadu is only just getting started. The most significant value creation is still ahead of us.\u201d<\/p>\n

The depth and breadth of Canadian backers are unusual for a Canadian tech company at this stage; usually as domestic startups evolve and attract larger funding rounds, they take on investors from the United States, Europe or Asia. Xanadu has attracted backing from foreign investors (including Bessemer Venture Partners, Lockheed Martin Corp. and Advanced Micro Devices Inc.) but Canadian investors including Mr. Weedbrook own 64.3 per cent of the stock. Even when Xanadu raised a US$275-million private financing alongside its go-public deal, about half came from Canadian investors, Mr. Weedbrook said.<\/p>\n

Xanadu CEO Christian Weedbrook wants his company to win the quantum race. Now he\u2019s betting big on going public<\/a><\/p>\n

Sid Paquette, who led the three deals for OMERS Ventures when he was a managing partner there, said that \u201cChristian was determined to make this successful and had no plan B. It was a binary bet on a person and an idea.\u201d Mr. Paquette, who now leads RBC\u2019s innovation banking unit, RBCx, said, \u201cThis is exactly what we need more of in Canada \u2013 betting on a smart and extraordinarily driven entrepreneur who was ahead of the hype cycle. It\u2019s just one example of what we can do in this country if we mix the right companies with the right capital at the right time.\u201d<\/p>\n

Of course, none of Xanadu\u2019s early investors are counting their winnings yet. Quantum stocks have been volatile. The industry is in its infancy and no company, including Xanadu, has yet produced a commercially relevant quantum computer that can achieve the technology\u2019s full potential, though several are valued into the billions of dollars. (Quantum computers derive their computational power from the peculiar effects of subatomic particles and are expected to some day vastly outperform supercomputers, opening up uses in finance and materials and drug discovery.) Short sellers have targeted several quantum companies, including Xanadu<\/a>.<\/p>\n

But if valuations hold through summer, it will create a dilemma for investors. Do they cash out when the lock-up lifts, or hold for potentially bigger returns if Xanadu delivers on its promises? OMERS, for one, is haunted by the fact that it quickly liquidated its Shopify Inc. holdings \u2013 picked up in a 2013 venture capital deal \u2013 after its 2015 initial public offering, missing out on the Ottawa company\u2019s massive subsequent run. \u201cWe did sell early and we probably learned some lessons from that,\u201d Mr. Hutcheson said. <\/p>\n

Mr. Weedbrook also hopes Canadian investors learn something from Xanadu\u2019s experience: \u201cThe next time someone says, \u2018You can\u2019t do it,\u2019 at least one or two people can say, \u2018Well, we\u2019ve seen Xanadu do it.\u2019 We need more of that.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: The Xanadu company office in Toronto.Eduardo Lima\/The Canadian Press When Christian Weedbrook founded…\n","protected":false},"author":2,"featured_media":646040,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-646039","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/646039","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=646039"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/646039\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/646040"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=646039"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=646039"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=646039"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}