At the beginning of this year, Damien Steel laid out a bold vision for the future of OMERS Ventures. Steel’s departure as the firm’s managing partner and global head of ventures to a portfolio company is the latest indication that vision will not come to pass.
Steel is leaving the Canadian pension giant to become CEO of Deep Sky, a Montréal-based carbon-capture startup linked to Hopper; Deep Sky made the announcement today, telling BetaKit the transition would take about a month. Steel will remain as OMERS’ representative on Hopper’s board and stay on the firm’s investment committee as a senior adviser. Both Deep Sky and Hopper are OMERS Ventures portfolio companies.
Yang’s appointment marks the first time OMERS Ventures has been led by someone outside of Canada since its launch in 2011.
An OMERS Ventures spokesperson confirmed to BetaKit that Steel will be replaced as OMERS Ventures head of venture capital (VC) by Michael Yang, the San Francisco-based managing partner leading the firm’s United States venture portfolio. This will mark the first time that OMERS Ventures has been led by someone outside of Canada since its launch in 2011 under the leadership of John Ruffolo, who preceded Steel.
Steel’s departure is the latest in a series of reversals for OMERS Ventures, which at the beginning of the year announced plans for a fifth fund featuring a unified global investment team. Since then, the firm has pulled out of the European market, losing or terminating multiple managing partners in the process. Now, only two managing partners remain: Yang, and Henry Gladwyn, who moved to New York as part of the London, UK office shuttering.
The changes at OMERS Ventures have mirrored broader changes at the pension fund. This year, OMERS has replaced its chief investment and growth equity leads.
Some expect that more changes could be on the way: multiple observers BetaKit spoke with speculated that without leadership on the ground in Canada, OMERS Private Equity senior managing director Michael Block could take over OMERS Ventures and oversee it alongside the pension fund’s Growth Equity division, which he took over in April.
The OMERS Ventures spokesperson told BetaKit there are no plans for Block to take over OMERS Ventures. “OMERS is committed to the Ventures platform and the leadership team believes that Michael Yang is the best person to succeed Damien,” the spokesperson said over email.
RELATED: After only four years in market, OMERS Ventures is pulling out of Europe to focus on North America
OMERS Ventures is the early-stage VC arm of the Ontario Municipal Employees’ Retirement System, one of Canada’s largest pension funds. The firm, which has backed Canadian tech success stories like Shopify and Wave, is also a long-standing investor in Montréal travel tech firm Hopper, one of Canada’s most valuable private tech companies.
Launched by Hopper co-founders, CEO Frederic Lalonde and ex-CTO Joost Ouwerkerk, and former Airbnb CFO Laurence Tosi, Deep Sky aims to commercialize carbon removal and storage solutions at scale.
A Deep Sky spokesperson confirmed to BetaKit that in recent months, the company has closed $15 million CAD in seed funding from Brightspark Ventures, the Québec government, and OMERS Ventures. The spokesperson also confirmed a report from The Globe and Mail that the startup expects to announce a $50-million Series A round co-led by Brightspark Ventures and Whitecap Venture Partners with participation from OMERS Ventures in the coming weeks.
“Damien is an expert at fundraising, leading and scaling companies, and his venture capital background combined with industry connections is invaluable,” a Deep Sky spokesperson told BetaKit. “Fred Lalonde looked for a trusted leader who has run a large organization well, who has climate passion, who understands the funding landscape, and who can be a true partner to scale this venture. That person is Damien.”
RELATED: Hopper co-founders launch new carbon-capture startup Deep Sky with $10 million in funding
Steel’s decision to join Deep Sky has some observers in the Canadian tech space raising eyebrows about the potential conflicts of interest, given the ongoing personal and financial relationships between OMERS, Deep Sky, and Hopper. One such observer pointed to the potential difficulties caused by Lalonde reporting to Steel at Hopper, while Steel reports to Lalonde at Deep Sky.
The OMERS spokesperson told BetaKit the firm has been “careful to ensure there are no conflicts.”
“As a Hopper board member, Damien is one of many, and if there are any discussions that put him in a potential conflict situation, he will be recused from those discussions,” the spokesperson said via email. “Similarly, with Deep Sky, he will not be involved in any OMERS Ventures investment committee decisions that have anything to do with Deep Sky.”
Steel told BetaKit that his work with Deep Sky “is in a truly operational role, not anything to do with the investment for OMERS,” adding, “On the Hopper side, it’s the exact reverse: I have no involvement with the operations of Hopper, I’m just a board representative appointed by OMERS … If, by chance, there’s ever a situation where there’s any chance of perceived conflicts, I’ll recuse myself from those votes.”
RELATED: OMERS Ventures enters 2023 with new playbook as firm looks to launch fifth fund this year
“Any risk [of conflict of interest] is seriously diluted by the size of the boards and frankly, the professional nature of these boards is such that nobody would ever let anything that even verges on a conflict ever happen,” argued Steel.
The Deep Sky spokesperson told BetaKit that Steel was offered the CEO role in late June, “two weeks after OMERS Ventures completed funding in the seed round.”
“While it wasn’t an easy decision for me, very quickly I realized that this was an opportunity of a lifetime, and you just don’t get to pick when those things come up,” said Steel.
Steel’s departure severs one of the few remaining leadership bridges between the pre-pandemic and post-pandemic versions of OMERS Ventures. Since its founding, many of the early leaders have now departed, including Sid Paquette (now at RBCx), Jim Orlando (now at Wittington Ventures), and John Ruffolo (now the founder of Maverix Private Equity).
“I’m disappointed to see the retrenchment of OMERS Ventures now with no Canadian investment managing partners.”
– John Ruffolo, Maverix
“I’m disappointed to see the retrenchment of OMERS Ventures now with no Canadian investment managing partners,” Ruffolo told BetaKit in a statement. “It took almost a decade to build it into the powerhouse that it was and it’s just gutwrenching to see how quickly it can fall apart.”
In February, BetaKit exclusively reported on OMERS Ventures’ plans to launch a fifth fund this year and deploy between $200 million and $300 million annually with a unified global investment team.
Earlier this month, when OMERS Ventures confirmed its plans to pull out of Europe, the firm indicated to BetaKit that these ambitions remained, albeit on a shifted timeline due to current market conditions. Today, an OMERS Ventures spokesperson indicated those plans have changed.
“Those plans have changed in line with the dramatic change in market dynamics, even in such a short time,” the OMERS spokesperson told BetaKit. “We have told the market that our focus is now going to be on the US and Canada because we believe these are the markets best positioned to weather the current financial conditions. OMERS is still committed to Venture and we are still deploying. But it is safe to say that like any venture firm, we are being extra cautious with the deals we are doing.”
OMERS global head of private equity Michael Graham told The Globe that the pension giant remains committed to VC and the early-stage Canadian market, specifically, but noted that OMERS will likely invest less in VC during 2023 and possibly 2024.
With files from Douglas Soltys.
Feature image courtesy OMERS Ventures.