OV 3.0. The constant state of change

FundOct 19, 2023

Earlier this summer, I had the honor of being asked to lead OMERS Ventures(OV). Every investment organization within OMERS bears a tremendous responsibility for investing on behalf of over a half million pension members and delivering the returns necessary so they can confidently retire knowing that they will have income for life. This is my third gig in venture capital and I’ve invested on behalf of many different LPs — fund of funds, endowments, corporations, and high net worth individuals. What’s unique about OMERS is that as investment professionals, we are afforded the opportunity to meet up close and personal with pensioners, and there’s a different social contract signed when you see the eyes of the individual you are investing for and know that they are counting on you.

OV was stood up in 2011 under a different pretext and in a completely different market environment. We were the first and still only Canadian pension-sponsored investment group that practices the art of venture investing on a direct basis into early stage technology start-ups (and by early, I mean investments in founders who have yet to launch a product). I am privileged to stand on the shoulders of all the OV’ers who have come before me and built this platform. As OMERS Ventures’ third leader and first American, I am steadfastly focused on furthering our historical success and setting us up for the future. Given that I am located in a geographic market that sees venture funds come and go every year, it’s not lost on me that we have to continue to reinvent ourselves to stay relevant.

As we enter the last quarter of 2023 and start to sneak a peek at 2024, I wanted to share our latest thinking and make sure you have a fuller picture of who we are and why you might consider working with us. We invest in four top level areas:

1. Horizontal B2B applications (HSaaS for short) — software that sales teams, marketing groups, HR units, the office of the CFO and other functional departments rely on is something we have long invested in. We like to ponder how the jobs to be done actually get done in a new world order with the advent of new data and technology.

2. Vertical B2B applications (aka VSaaS) — mission critical solutions that are industry specific, unique to how that vertical conducts business. This means technology specific to restaurants, home service professionals, freight forwarders, retail stores, or hospital systems, as examples. We’ve moved beyond digitization and basic systems of record to a new horizon of insights and process automation.

3. Fintech — we are most interested in financial value exchange — companies operating at the intersection of fintech and commerce. The movement and management of financial assets and data has really evolved in recent years. Today’s financial institutions live in interesting times with disruptive forces and regulation coming at them from all directions. Finance is becoming embedded and any company can become a financial company now with tech enablement.

4. AI — from rules engines to machine learning and natural language processing to transformers and large language models, this revolution is upon us. Our existing portfolio companies are taking advantage of this and we want to back net new native startups endeavoring in this space.

Why these four? With over seventy investments since inception, OV has consistently invested in HSaaS, VSaaS and Fintech. We have accumulated many lessons learned (success and failures) working with start-ups in good times and bad. Further, our team today was assembled with this in mind, and each individual brings some degree of lived experience. The companies that we have backed over the last 12 years bear this out:

Most of our time is spent deepening our understanding and finding the next world class entrepreneur in these four centers of excellence (COEs). But we maintain a growth mindset — a willingness to learn new things and invest in emerging categories. This is how we have come to support companies such as Hopper in travel, DuckDuckGo in privacy, Wattpad in digital media, Rover.com in marketplaces, Xanadu in quantum, Deep Sky in climate and Caraway in healthcare. We hope to be enticed into additional opportunities outside our core four going forward.

Our team is on the ground in the Bay Area, New York and Toronto — three relevant hubs for what we invest in. AI is in Toronto and San Francisco. Fintech is in New York and more. VSaaS and HSaaS are everywhere and nowhere in particular at the same time. New York is new for us — we’ve got a handful of companies that we’ve already invested in based there already and a couple more where the CEOs are located there. Christina Farr is already on the ground in NYC and Henry Gladwyn is en route. More folks will be relocating there in due course. But importantly, today’s OMERS Ventures investor is geographic agnostic — we aren’t solving for the local maxima. Rather we are looking for the best in our discipline regardless of where the entrepreneur sits. After all, many of founders are remote or hybrid.

So who should you get to know here? Team members invest across multiple disciplines but Eugene Lee, Justin Ouyang and Thomas Ryan are your starting points for HSaaS. Shawn Chance, Taku Murahwi and Marissa Moore, CFA do our deepest thinking on VSaaS. Laura Lenz, Charlie Renzoni and Dave Wechsler sponsor fintech. Henry Gladwyn and Namat Bahram geek out on AI. I float across all COEs and Chrissy continues to drive healthtech and has added a new responsibility as Special Advisor to OMERS Growth Equity.

The investment team is supported by Jennifer Janson on business operations, Amanda Ashford on communications, Jenny do Forno on talent, Casey Rovinelli on our proprietary data & technology platform, and Brian Kobus on fund operations and LP relations. If you want to get a better sense of our team, you can often find us at major industry conferences or read about our points of view on our socials. Better yet, you may have stumbled across colleagues like Chrissy and Second Opinion, Dave and Insurtech Rap,Marissa and The Green Room or Taku and HIITVC. That’s as real as we get.

I often get the question about our stage of investing and I will tell you — do not let our OMERS name belie something we are not. While a pension plan might suggest later-stage investing to you — our bread and butter investment is a Series A, B or C stage company. We evaluate dealflow in a stage-appropriate manner. What does that mean? Here’s an example: a start-up hitting the $1M ARR threshold from a founder-led sales motion where product is post version 1.0 and very few “Heads of” leaders onboard is our standard earliest entry point. We invest frequently at this early stage, especially for B2B software business models. At the opposite end of the spectrum, founders who have clearly found product market fit, know their ideal customer profile, have brought on some functional leaders, know the unit economics of the business, and want an investor to underwrite additional scaling up and hardening of the organization — well, that’s another scenario, what we call early growth, that’s in our wheelhouse where we have a lot of experience for both B2B software businesses as well as tech-enabled services.

Do we have a standard check size for initial investment? We’ll tell you our range is $5–25M but obviously your mileage will vary with us. The majority of the time, we lead or co-lead our investments, putting down a term sheet and sitting on the board of directors. That’s not a must-have and we have many delightful experiences where we join a syndicate of investors and support the management team in an on-demand fashion. Furthermore, when we are learning about new technologies, we deploy small checks (think $250K) on an exception basis, in a quick manner but we are not a pre-seed/seed fund. All to say, we prefer to be multi-stage to give us the flexibility to participate on a multitude of founder journeys without a specific ownership hurdle. A range is simply that, a range.

Like many, for us 2023 has been quiet. Our portfolio is in a good spot — we are no longer having to spend so much time with our portfolio navigating the current climate. We have dry powder in our current fund for many new investments and we’re eagerly awaiting more founders to come to market. So ping us, and if you have any feedback for me on OV 3.0, you know where to reach me.