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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.
