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Sierra Wireless Inc. chairman Kent Thexton will become the Vancouver firm’s full-time CEO, taking the helm of a global supplier of technology for the burgeoning internet-of-things market at a pivotal time for the 25-year-old company.

It’s a move with broader repercussions for Canada’s teeming tech sector. Mr. Thexton, who stepped into the role on an interim basis in May after the ouster of Jason Cohenour, is leaving his position as a general partner at ScaleUP Ventures, a Toronto-based venture capital firm co-founded by former Rogers Communications chief executive Nadir Mohamed. ScaleUP closed its first, $100-million fund last year backed by some of Canada’s largest corporations and the Ontario government.

“It was an incredibly difficult decision,” said Mr. Thexton, a veteran telecom executive and entrepreneur. He will remain on the board of ScaleUP and join its “leadership council” alongside numerous corporate heavyweights, including the CEOs of three big banks, BCE and Rogers and Magna International, which have helped many of the 22 companies ScaleUP has backed to build their fledgling businesses.

It’s also a setback for fellow ScaleUP general partner and entrepreneur Kevin Kimsa, who has known Mr. Thexton since he joined Mr. Kimsa’s first software startup, Solect Technology Group, as a director in 1996. The two had discussed starting a venture fund together since the early 2000s (they briefly worked together at OMERS Ventures), and “this was the opportunity for us to do [that],” Mr. Kimsa said.

Although he acknowledged Mr. Thexton’s departure was a “disappointment,” Mr. Kimsa said he expected little difficulty recruiting a replacement ahead of the firm’s planned return to market next year to raise its second fund. Responsibility for the eight investments Mr. Thexton had led will be distributed among three other partners. “We’ll be fine,” Mr. Kimsa said. “I don’t think it’s all that disruptive.”

Mr. Thexton played a leading role as a Sierra director over the past 12 years, pushing the company to transform from its legacy business selling mobile internet connection devices for laptops to positioning itself as a leading player in the internet-of-things business, said fellow Sierra director Greg Aasen, who was on the search committee.

Sierra, which had US$692-million in revenue last year, makes chips and circuit boards that are embedded in industrial machines ranging from automobiles and payment terminals to washing machines. The technology enables them to transmit performance data so their manufacturers and operators can determine when they need to be maintained or replaced. Sierra sells about 18 million devices per year.

Over the past three years, the firm has tried to broaden its business by adding software and services offerings, including its own mobile virtual network, so clients don’t have to deal with separate wireless carriers. The services business offers the promise of higher margins and recurring revenues and “significant long-term growth” as more machines and devices are embedded to transmit data over wireless networks, BMO analyst Thanos Moschopoulos said.

But with recurring revenues reaching just 12 per cent of sales this year, the board grew impatient with the pace of change and decided to look for a new CEO. Mr. Thexton agreed to take on the role, but told fellow directors he wasn’t interested in staying on. But after a few months, he realized the opportunity “was more significant than I had been able to see” previously and that he had a chance “to keep a strong Canadian technology company independent,” he said.

Despite being an investor in ScaleUP, veteran U.S. venture capitalist Santo Politi said Mr. Thexton made the right choice. “In the short term it may seem detrimental to ScaleUP, but I don’t think so,” Mr. Politi said. “It’s great for Sierra and it could be great for ScaleUP as well,” as Mr. Thexton stays on as a director.

"While we will definitely miss [Mr. Thexton’s] contribution to ScaleUp … I am confident that with Kevin and the ScaleUp team we will continue to build on the success we have had with our model of corporate engagement,” Mr. Mohamed said.

With Mr Thexton’s appointment as CEO, Sierra director Robin Abrams will take over as the company’s chairwoman.

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Magna International
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