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Data Innovator: Kevin Stevens, Energize Ventures
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.
Kevin Stevens is a Principal at Energize Ventures, a leading global alternative investment manager focused on accelerating digital innovation for energy and sustainable industries.
Tell us about your strategy and how Energize takes a unique approach to investing
I would say we're unique in two ways. First, we have a strong network that we can use to commercialize our investments. Our investors include both traditional limited partners (LPs) seeking to invest in the energy transition and strategic LPs who operate within energy and industry. Those strategic LPs both provide insights to help us make the best investments and have the opportunity to see the newest technologies coming to market in their sector.
The second way we are unique is that we are strictly focused on business model innovation and software. Sustainable investing is still a very hardware-centric space, but we look for companies that fit the venture model: capital-efficient businesses that can scale.
Over the next few years, what trends do you see impacting the growth of your sector?
Sustainability is the first and most obvious one: Everyone is talking about it, financial institutions are investing in it, and consumers are pushing it.
The second one is digitization. It's not a perfect analogy, but I like to use the example of consumer technology, where the decline in the cost of hardware and computing power led to the explosion of software and eventually mobile apps. That's happening in energy today, where solar panels, battery technology, and sensors are as cheap as they've ever been. We predict that end user demand will go up, and the best way to meet the challenge of higher demand is through software.
Our portfolio company Aurora Solar is a great example of this: demand for solar panels has increased significantly as costs have gone down, but selling to meet that demand is difficult if you don't have systems in place to get the product out to consumers. Aurora solves that problem with its solar sales and design software.
The collision course of those two trends - sustainability and digitization - will be huge over the next couple decades.
You recently started using iLEVEL for portfolio monitoring. Why did you make the decision to adopt new technology for operations at Energize?
We really believe in systems, whether that's how we invest or how we report to our investors, and this was a natural next step in evolving our reporting process. We pride ourselves on transparency and engagement with our LPs. iLEVEL enables us to continue doing what we do best more efficiently; we can get the same granularity in our data in about half the time.
Working with iLEVEL and the IHS Markit team made sense for us because the customer service was very strong from day one. The quality of that engagement continued through implementation, which has also been a seamless process.
What was most important to you when it came to building your internal systems?
We are scaling quickly across funds and products as we expand from our core venture fund to our later-stage growth fund. We needed software with the flexibility to handle multiple funds and also adapt to custom data processes.
We need flexibility in a few different areas. First, we wanted to adjust our data collection to the specific circumstances of our portfolio companies. For example, most of our portfolio companies are unlikely to take on debt, but when we had a recent example of a company that did so, we were able to easily incorporate that into the KPI-tracking for that individual investment.
We also looked for flexibility in terms of reporting and benchmarking. iLEVEL allows us to look at one fund at a time or see the whole portfolio, and report on an LP co-investment alongside data from a fund. We have been able to tune our reporting to the needs of each specific LP.
How does improving your data capabilities impact your relationship with LPs?
Our goal is to make sure that every LP who invests in any of our funds receives exceptional service across the board. As we mature and grow our investor base, we want to be able to continue to provide impactful reporting across any of our funds. Each investor should be able to get first-in-class data, regardless of the size of their commitment.
How do you think about the return on investment of adopting new technology?
At Energize, an overall philosophy we have is in investing in tools that free up time. As an alternative investment manager, our product is building an engine that makes great investment decisions, and anything that opens up time so that we can direct more focus towards that is a win for us. If we can collectively get back a week of the team's time per quarter that was spent on reporting, we can spend those resources going deeper on a particular sector or focusing on a portfolio company.
I always go back to the important questions: Can we invest in our processes to make ourselves better investors? And how can we do that in a best-in-class way? iLevel helps us solve for that.
Can you tell us a little more about how you think about sustainability and how that impacts your data processes?
We invest with a broad sustainability lens, and roughly 90% of our portfolio has some ESG slant. A great example of that focus is DroneDeploy, a drone software company which recently supported the development of an 8,000-acre solar farm, the largest in the U.S.
Sustainability is something we take seriously and measure across both Energize as a firm and our portfolio. On the investor side, we have LPs who have different ESG metrics they are trying to track, so we need the flexibility to collect specific information down to the portfolio company level. One of the reasons we decided to use iLEVEL was the flexibility of the dedicated ESG module.
Do you have any advice for other firms that are at a similar stage of fast growth?
I would advise them to remember to think in terms of the firm and not just a single fund. When your product is investing, it is easy to focus on how to get to the next deal, but the more time you spend on your team, systems and operations, the better you will be set up for success in the long term.
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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