A strong vision to capture a large growing market
A great product with strong defensibility
An exceptional team that I believe can execute on the shared vision
As part of my series about “5 Things I Need To See Before Making A VC Investment” I had the pleasure of interviewing Laura Lenz.
Laura is a Partner of OMERS Ventures, leading the fund’s Canadian investment activity. Laura has over 15 years of experience, including prior roles as a Partner with Generation Ventures, Investment Director with MaRS Investment Accelerator Fund, and Principal with EdgeStone Capital Partners. Laura started her career with BMO Nesbitt Burns as an investment banker focused on media and technology companies and extended her public market acumen into private equity investing for the firm with roles in Toronto and New York City. Throughout her career, Laura has focused on investing in emerging technology companies, specifically in customer-centric businesses that focus on the future of work, human-augmented AI, and the future of retail. Laura approaches investments with a strong focus on metrics, team, financials, and strategy to ensure that a company is well-positioned for the next stage. Recently, she led research to find any correlation between tech valuations in the wake of economic downturns to determine how long it would take to recover to pre-downturn valuations.
Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit. Can you please share with us the “backstory” behind what brought you to this specific career path?
Atthe very start of my career, I had the opportunity to work in Tokyo for a summer at the telecom company NTT. I had exposure to the work they were doing in their innovation lab (more than two decades ago!) and it sparked a deep interest in technology that never went away. But I had investment banking in my blood — my father, uncle, and cousins were all investment bankers so that was a natural path for me.
I did an undergrad degree in Business and started in investment banking when I graduated. But soon I found it was too transactional for me. I would spend all this time building a relationship with a founder or management team and after the transaction was completed, I had very little reason or opportunity to engage with them again.
It was during a period where I was seconded to my company’s venture team in NY that I felt like I’d found my true home. Not only did I get exposure to the most cutting-edge technology, but I had the opportunity to work hand in hand with the companies we backed. And the rest is history!
Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
I’m an avid reader, so it is impossible for me to name just one.
On a personal note, The Brain That Changes Itself, by Norman Doidge gave me hope at a time when I didn’t know where to turn. I had just discovered that my infant son had had a stroke in utero and his prognosis was completely unknown. This book not only gave me hope for our own son, but it inspired me to create a support network to help others who were in the same position I was. A decade later, my son has beat all expectations and the association is positively affecting the lives of hundreds of children and their families.
On a professional note, I am a big fan of The Five Dysfunctions of a Team by Patrick Lencioni. It’s an easy-to-read fable, with a model for effective teambuilding that has always stuck with me. The insights from that book ground me — they inform the colleagues I choose to work with and the management teams I seek to back.
Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?
I’m not sure who said it first, but a quote that has always resonated with me is: ‘I always knew looking back on the tears would make me laugh, but I never knew looking back on the laughs would make me cry.’ I guess it always reminds me to keep things in perspective and to appreciate the present. I like to be intentional about the people I choose to work with. And when it comes to backing founders, I do think quite hard about whose journey I believe I’d like to be a part of. Because there is always a combination of laughter and tears when you’re working hard to build a business.
How do you define “Leadership”? Can you explain what you mean or give an example?
To me, true leadership means having a vision and style that inspires people to want to follow you, with a shared passion for reaching a goal. I’ve been lucky in my career to have had the opportunity to work with a good number of inspiring leaders. One who influenced me early on liked to say ‘be real’ in whatever you do. He was a shining example of someone who walked the talk — and I’ve never forgotten that.
How have you used your success to bring goodness to the world?
Almost a decade ago I founded the Canadian Pediatric Stroke Support Association (CPSSA), following the stroke diagnosis of my son Nolen. After experiencing first-hand the lack of support, information, and prognosis available to those affected, I began building the CPSSA from the ground up in 2011. Today, the CPSSA has a community of more than 500 families who are caring for children who have suffered a stroke.
Over the last nine years we have raised $2.3M for a stroke imaging lab for children at SickKids Hospital in Toronto to enhance understanding of pediatric stroke causes and prognosis, implemented a fundraising initiative for much-needed therapy bursaries for children who have suffered from a stroke, and also petitioned for and secured the recognition of May 6th as the official Pediatric Stroke Awareness Day across Canada.
Ok, thank you for that. Let’s now jump to the main part of our discussion. The United States is currently facing a very important self-reckoning about race, diversity, equality, and inclusion. This is of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?
I’m saddened that we live in a society where there are some people who continue to believe that the only way to be successful is to put other people down.
Of course, there are things we all could and should be doing within the VC ecosystem to address the issue of diversity and inclusion in our own funds and portfolio companies. A few examples include providing broader access to pitching, investment capital, employment, mentorship, and promotion pathways. We could all benefit from being more intentional about the decisions we make and the initiatives we create across all of those areas. But, I think we also need to consider more grassroots activity too. There’s a lot more that can be done to expose young students to the wide variety of possibilities out there — inexpensive coding classes, subsidized access to the Internet for education purposes, creating awareness of career pathways in technology, micro-secondary education rather than college degrees. The list goes on.
On a broader societal level, I do believe that the mainstream media can play a critical role in educating the masses about what is ‘normal’ simply by being more inclusive in the programming created.
Can you share a story with us about your most successful Angel or VC investment? What was its lesson?
I think probably one of the most positive lessons I learned was through my investment in Varicent, which ultimately sold to IBM. That investment reinforced that just because someone else is already in the market, it doesn’t mean there isn’t room for a disruptor if the founding team has a unique understanding of the market gap. And as with every investment, the most critical thing is backing a team with the right vision and ability to execute. That’s easier said than done!
In general, identifying risks in investments early on doesn’t rule them out. Especially if they are risks that you know the team, or your support, can tackle or mitigate. These are often the diamonds in the rough. Though it is easy to be attracted to the next bright, shiny thing, often that’s not where the best investment returns are made.
Can you share a story of an Angel or VC funding failure of yours? What was its lesson?
The toughest ones are always the ones where we learn the most which are important for an investor who wants a long career in venture.
Early in my career, we invested in a company with disruptive tech. But the market wasn’t quite ready for it. No groundwork had been laid — there was a lack of awareness of what could be achieved, which made selling the product almost impossible. I learned the hard way that just because a company has a fantastic technology solution doesn’t necessarily make it a market winner. That part is as much about market awareness and timing as anything. The experience instilled in me early on that it is deep tech coupled with an incredible sales enablement motion or product-led growth that combine to become a category creator.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?
The nature of venture capital investing is that we hear approximately 250 pitches before we commit to investing in one, so inevitably I have passed on deals that in retrospect maybe I wish I hadn’t. But I try not to have regrets — hindsight is 2020, right?
Ironically, I passed on investing in TouchBistro in 2014. And now I have landed at OMERS Ventures, a company that has subsequently led the company’s Series D financing, and where OMERS Growth Equity led the Series E financing!
An important lesson I’ve learned over the years is that when investing in a small market like Canada, companies can evolve or pivot to find their “A-ha moment” at any time, so it’s always beneficial as an investor to stay close.
Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why? Please share a story or example for each.
I probably have a list of 20 — and of course, it varies depending on what stage a business is at, but if I had to choose just five, it’s these. I will use a recent investment I made on behalf of OMERS Ventures to illustrate each of these points, as I think it is useful to paint a picture of how the whole is greater than the sum of the parts:
1. A strong vision to capture a large growing market
Investors see so many different founders, all with unwavering belief in their vision, so it is easy to get swept up in the passion they display. In many ways, it is our job to try to prove or disprove our own belief that the market is there for the taking and now is the right time. Video security might not be the first market that comes to mind when you think of a traditional tech start-up. But the video security market segment is expected to grow from US$47B in 2019 to US$72B in 2022 as the global installed base of cameras reaches one billion devices. What’s happening today is that businesses who have these cameras installed are looking to extract more value out of the terabytes of data captured by their cameras. I invested in a company called Solink, led by Mike Matta at a previous fund, and when it came time for him to raise his next round, based on past experience, I was immediately interested in investing. Mike knows his market inside out, and since the inception of his business, he has been relentlessly focused on delivering exactly what his customers want. Knowing what the customer wants — and delivering it — is a surefire way to ensure you capture market share.
2. A great product with strong defensibility
Solink started with an initial vision of a security-specific solution. By capturing over a million minutes of video a day and observing its clients’ use cases, the company realized that its platform had evolved from the initial security-specific solution into a hub for loss prevention, physical security, and a tool for improving in-store compliance. Its product quickly evolved to leverage the power of the video data captured and provide extra value back to customers. It has used the same responsive philosophy to evolve quickly, giving customers what they have needed most during the pandemic-enforced lockdown.
3. An exceptional team that I believe can execute on the shared vision
A successful company needs a strong CEO. Mike Matta is bright, demonstrates integrity, and embodies grit in finding new clients, onboarding new customers, and solving problems. He is determined to win. Because he has such a clear vision, and an incredible work ethic, people want to be part of his team. In this case, I had had previous experience working with Mike, so I knew how he operated. It was a lucky position to be in because often you only really learn what the team is capable of when you have the opportunity to see them operate over an extended period.
4. Metrics, metrics, metrics! OK, I’m cheating a bit here by putting these into one category, but they are critical. We typically invest at Series A to C stages. If we look at Series A as an example, the metrics I would be looking at include:
· Velocity — revenue growth, net dollar retention, gross dollar churn, MQL: SQL conversion, days in the sales cycle, and Net Promoter Score (NPS)
· Capital Efficiency — net cash burn: net new revenue, capital consumption required to achieve $10M revenue, and sales efficiency
· Profitability — low customer acquisition cost, with a high lifetime value per customer, the payback on the customer acquisition costs, revenue per employee, and gross margin.
For the most part, at least some of these metrics have to have a serious ‘wow’ factor. These metrics are often confidential, so it is difficult to share much detail here. Like many businesses, Solink’s explosive growth meant that early on there were growing pains in several areas of its business. The interesting part is looking at how the team addressed any challenges, and what the resulting outcome has been. In Solink’s case, it has resulted in an incredibly low churn rate and a net dollar retention rate over 145%.
5. And finally, having learned from past mistakes, I must have unwavering trust in the founder and management team.
Of course, trust is built over time. And I have had several years to build a relationship with Mike. Which makes it easy to tick this all-important box. But for founders who I’ve not before, trust is built throughout the initial information sharing stages, and as part of due diligence. My mantra is that I don’t like surprises. If a founder is honest with me upfront about the good news and the not-so-good, I know straight away that we’ll be able to work well together.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.
I think the effects of the pandemic have exposed enormous inequality in our education system, and in many cases lack of innovation and efficiency. In many ways, the education system right now is being forced to adopt a more agile framework — like those used in start-ups every day. In my view, bringing the same level of innovation, efficiency, and accountability that we have in our tech ecosystem to the public sector would be a great thing.
We are very blessed that some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this.
This is an impossible question! If I was forced to choose, I think I’d say Trevor Noah. From what I’ve read, he had a fascinating childhood, he’s South African (and it’s a place I love to visit), and he’s doing an incredible job of leveraging his social platform for BLM. Plus, he’s hilarious, which is what makes for a great lunch!