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Data Innovator: Alex Borschow, Semillero Partners

02 August 2021

Our Data Innovator series tells the stories of private markets professionals and firms who are looking at data in new ways, using technology to gain new insights and improving the way they serve investors. Sign up to hear about future articles like this.

Alex Borschow is a Co-Founder and Managing Partner at Semillero Partners, an early and growth-stage investment fund with a focus on the food and beverage, food technology and wellness industries.

What makes Semillero Partners different?

What makes us different is how we focus on finding amazing entrepreneurs who have the vision to make transformative change in the food system. We are low-volume, high-touch investors who like to get to know the founder and the management team over time. We gather a lot of data points and personal interactions, and then see how they plot over time.

We're looking for people who are thinking big about making healthier food products that are better not only for people, but for the planet as well.

What are some of the major developments you are seeing in your area of the market?

We're excited about the growth of plant-based alternatives, and plant-based food in general. Consumers are becoming more interested in understanding where their food comes from, what's in it and how they access it. It's creating a deeper demand for whole-plant foods that are not only nutritious but have a much healthier carbon footprint. Consumers are also making the connection between what they eat and holistic wellness, and they are looking for brands that resonate with their values.

Along with that, there's been a shift in how consumers access their food, which is fueling the growth of food delivery and direct-to-consumer businesses. New channels are opening up thanks to improvements in technology, infrastructure and logistics.

How do you think about measuring sustainability and ESG impact in your investments?

As an impact-focused fund, we measure ESG metrics and report on them regularly. When we were making our first investments, we worked closely with our largest LP to create a questionnaire for our portfolio companies that addressed a range of impact metrics. We review that process every year to make sure we are capturing the data accurately, and where there is room for improvement.

And we're very interested in doing more. As we start raising our second fund, we have communicated that we're going to support all our portfolio companies in developing plans to be net zero carbon by 2030.

Semillero is a young firm. What made you recognize the need to incorporate technology in your operations early on?

As our portfolio continued to grow — we scaled up from 6 to 16 investments in less than two years— it became increasingly more challenging to track all the data in one place. With a team of just three people, we have a limited capacity to gather information and monitor the portfolio while also investing and reporting to LPs.

We were able to scale quickly by leaning on the IHS Markit expert services team. They manage our data collection and consolidation, and they also support the management of our technology environment in iLEVEL with a dedicated platform expert.

How did you ultimately decide to use iLEVEL?

We like to choose service providers in the same way that we choose entrepreneurs for our portfolio; we evaluate with multiple data points and multiple interactions. Throughout the process with the iLEVEL team, the communication was transparent and timely, and they made very efficient use of our time. And once we began the implementation process, the iLEVEL team was consistent. We never felt like we had to follow up with them.

Additionally, their willingness to adjust and customize for our needs via the flexibility in the platform was a major selling point for us. We have worked with our platform manager on a weekly basis and he has been able to adjust the environment based on our feedback.

How do you design and track KPIs for your portfolio companies?

Our portfolio has a variety of companies in different industries, and KPIs really vary by industry. We work with our companies to develop OKRs, a management and goal setting strategy that helps define and align key results. If we do that from the ground up, it allows for much more consistent reporting and data collection.

We have also been working with the IHS Markit team to incorporate metrics from our ESG questionnaire I mentioned earlier, in order to capture those impact metrics in our data collection process and make them visible in iLEVEL.

Have you noticed any early benefits of outsourcing your data collection processes?

Absolutely. Our small investment team had been doing a lot of legwork and follow-ups to get financial reporting data from our portfolio companies. The need for that work has decreased dramatically, which allows us to spend more of our time and energy focused on where we can most add value.

And the process of gathering data from portfolio companies generally become much more efficient. It is starting to become more of a habit for our companies, and as it does, that should further decrease the amount of follow-up that we have to do.

How do you think having better visibility into your data will impact conversations with potential investors and portfolio companies?

Starting with the data in iLEVEL as a base — and not having to build it from scratch — is going to make it much easier for me to be able to talk about metrics like IRRs and MOICs for existing portfolio companies. And it will allow us to report and provide tear sheets to investors in our future fund much more quickly.

We are also growing our team, and it's highly beneficial to have better data available as we have more people analyzing key portfolio metrics. With a central repository for information, we can have more eyes on the data and discover important changes quickly. We will be able to use the data to better target our conversations with portfolio companies and support them without having to send them additional data requests.

As you think back on your experience, what advice would you give to other fund founders, or to those who are in a similar stage of growth?

My advice would be to invest early in having an efficient platform for consolidating your data, maybe even before you've started deploying capital. It will save you a lot of time, not only with reporting, but also visibility and establishing the discipline with your portfolio companies to submit their information. Those benefits only grow over time.

IHS Markit provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

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