Ontario Municipal Employees Retirement System’s head of venture capital, Damien Steel, is departing to lead an ambitious climate technology startup founded by one of Canada’s most successful tech entrepreneurs.
Mr. Steel, managing partner of the pension giant’s $2-billion ventures group, will become chief executive officer of Deep Sky Corp., which is chaired by its co-founder, Fred Lalonde, CEO of online travel company Hopper Inc. The move comes weeks before Deep Sky is set to announce a $50-million venture financing that Canadian investors Brightspark Ventures and White Cap Venture Partners have agreed to co-lead. OMERS will also put in at least $5-million.
OMERS is a long-standing investor in Hopper, one of Canada’s most valuable private technology companies. Mr. Steel will remain OMERS’ representative on Hopper’s board and sit on OMERS’ investment committee in a senior adviser role.
Mr. Steel, Mr. Lalonde and Michael Graham, global head of private equity at OMERS, all dismissed concerns about the potential for conflict of interest. Mr. Steel said he was offered the Deep Sky job in late June, two weeks after OMERS Ventures completed funding in the seed round.
As for Mr. Steel’s roles with the two OMERS-backed ventures, Mr. Graham said, “He’s fully aware how to be a board member and where his obligations lie. I’m not concerned there are any governance-related matters.”
Mr. Steel will be replaced as head of venture capital at OMERS by Michael Yang, the San Francisco-based managing partner in charge of OMERS’ U.S. venture portfolio. It will be the first time the unit is led by someone outside Canada since its launch in 2011 under Mr. Steel’s predecessor, John Ruffolo.
OMERS was the first Canadian institution to recommit to venture capital after the 2008-09 financial crisis, backing several future domestic tech stars including Shopify Inc., Jobber, Wave Financial Inc., Wattpad and Hopper. It later expanded to the United States and Europe, but recently shut its London office.
Mr. Graham said OMERS remains committed to venture capital and to the Canadian early-stage market, specifically. “The venture program has done very well for us. Returns have been strong and we expect them to remain strong. There won’t be a massive shift in our investment strategy as a result of having Michael at the helm,” he said.
But Mr. Graham added that OMERS would likely invest less “this year and maybe next” in venture capital as funders overall pull back.
Deep Sky’s mission is to capture carbon from the sky and oceans using technology developed by other companies, store it underground in Canada’s vast terrain and power the enterprise with abundant cheap renewable power. Revenue and financing would come from selling carbon credits in a market where demand outpaces supply.
The company hopes to select a site in Quebec within months to launch a pilot operation.
Mr. Lalonde has courted Mr. Steel for years, at one point asking him to join Hopper as chief financial officer. And Mr. Steel has long praised Mr. Lalonde as one of the top OMERS-backed CEOs. Although Mr. Steel has spent his career in finance, “I’ve always thought he would make a great operator and I was always telling him, ‘If you ever decide to jump over as an operator, tell me first,’” Mr. Lalonde said.
When it came to hiring Deep Sky’s first CEO, Mr. Lalonde said, “the main criteria I had is it had to be somebody I knew already. Damien was on a list of one.”
Ex-Hopper chief technology officer Joost Ouwerkerk and Laurence Tosi, a Hopper director and former Airbnb Inc. CFO, are also Deep Sky co-founders.
Mr. Steel said “it wasn’t obvious to me” at first he was the right person for the job. But after some convincing, he realized “I have a once in a lifetime opportunity with someone I know and trust. I’m 45. If I’m ever going to take a swing, now is the time.” Mr. Steel, who speaks French and lives in Toronto, will take an apartment in Montreal, where Deep Sky is based.
Mr. Lalonde said he isn’t worried about Mr. Steel’s lack of technical expertise, given how nascent the carbon capture and trading industry is, saying he can hire functional experts. He said Mr. Steel’s financial experience is most vital, given “the amount of financial literacy and financial engineering we’re going to need to do this. This is about building an industry that is the size of oil and gas in the next five to 10 years.”
Brightspark partner and Deep Sky director Sophie Forest said in an interview that being CEO will be a learning experience for Mr. Steel. “But I’m 100 per cent convinced he can do that.”
Mr. Graham said “it’s a good thing for Damien, it’s a good thing for OMERS. We think Deep Sky has a great opportunity” to help address climate change challenges.