SG Orange County: OMERS Ventures On The Difference Between Angel Investors and VC’s

“It’s not every day that you can glimpse into the mind of someone who is actively transforming the Canadian investment landscape. Startup Grind OC was privileged to have guest speaker Damien Steel, Director of OMERS Ventures, to share some incredible business perspective and personal philosophies with our community.

What’s a day in Damien Steel’s shoes? Approximately half of his time goes to the investor side, and the other half goes to managing the operations of his funds, or “putting out fires.” Steel keeps half of his day open to work closely with the entrepreneurs and says that “The most exciting part of my job is when a CEO calls me and asks my opinion on something. So I need to make sure I’m available for those calls.”

Interestingly, though he wants to be accessible and valuable to his companies, he has no desire to run them. “I’m there to challenge them, to challenge their assumptions, and…to help them. I try to keep regular contact with my CEOs just because I like to know what’s going on, but very rarely will I inject myself into their businesses.”

Another interesting view Steel expressed was that he would “much rather meet a founder and a company before they need money.” This allows him time to familiarize himself with the company and founder, and it also allows Steel to show the value of partnering with OMERS. To Steel, getting along personally with the founder is crucial, and building an ideal relationship takes time before the investment. “When you take money from someone, you’re talking about a 5-10 year investment, so you should definitely like the person.”

Steel looks for great founders and management teams. He’s found that by the time a company successfully exits, the idea is rarely the same as what they first pitched; he’s investing in the founder’s potential to perform under pressure, to adapt the business as necessary, and to create a powerful team. You have to “invest in the people, the entrepreneurs who are passionate [and] have a level of intensity.” So for all entrepreneurs, Steel’s best advice was to, “Accept that you don’t know much at all and surround yourself with people who do.” That means putting together a team that can do your job better than you can and actively seeking out the best talent in your space. “Aim high. Don’t just hire because it’s what you need. Because you are only as good as your team,” Steel recommends.

Personally, my biggest “aha moment” during the event was when Steel explained the difference between Angel investors and VC’s, two terms that are often used interchangeably. According to Steel, Angel investors invest their own money, so they can do whatever they want to, whenever they want to, with whomever they want to. VCs, on the other hand, often invest from a pool of funds, so they’re governed by a greater set of extremely explicit, meticulous rules, covering everything from what they can invest to how they’re compensated. If entrepreneurs familiarize themselves with the rules governing a particular VC and tailor their pitch to best fit the investors’ requirements, it makes the pitch exponentially more likely to resonate with the investor. That really made a lightbulb go on in my head, because I’ve always thought of investor pitches as a reclusive “hit or miss” process; but Steel showed that with the right homework, you can tell the investors exactly what they want to hear.

As an audience member, I thought that this was one of the best Startup Grind events I’ve ever been to; though Steel clearly knew what he was talking about, he didn’t have an air of arrogance and was extremely personable—I’m pretty sure at least half the room lined up to speak to him afterwards! This was really impactful as an attendee, because I felt as though he was truly embodying his business principles of openness and accessibility.

How can we bring more VC’s like Steel to Orange County to invest in the massive potential that exists here? Steel recommended that we focus on our triumphs and develop internally, and outside investors will inevitably be attracted to us. Investors typically have a large network of investors and when one finds potential in an area, the word spreads quickly. In fact, Steel shared that many of his best opportunities came about by word of mouth.

And perhaps most importantly, “Keep the weather as it is, and call us in the winter,” Steel says, laughing. “We’ll return your call.”

Join us for the next Startup Grind OC event to hear some more incredible insights on entrepreneurship and business!

Written by Rafah Ali