Democratizing Investing in the Energy Space

Adam Torres and Larry Galan and Rollyn Reyes explore Energia.

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Show Notes:

Energia aims to provide increased access to energy investments. In this episode, Adam Torres interviewed Larry Galan & Rollyn Reyes, Co-Chief Executive Officers at Energia. Explore Energia and how it’s helping investors access investments in the energy space. 

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About Energia

Energia’s mission is to democratize energy investing by giving investors exclusive access to fractional private market energy investments sponsored by top-tier investment firms.advocate for Canada as a globally under-valued natural resource powerhouse and well positioned for a natural resource renaissance.

Full Unedited Transcript

 Hey, I’d like to welcome you to another episode of Mission Matters. My name is Adam Torres, and if you’d like to apply to be a guest in the show, just head on over to missionmatters. com and click on be our guest to apply. All right. So today I have Larry Galan on the line and Roland Reyes, and they’re co CEOs over at Energia.

Larry and Roland, hey, welcome to the show. Thanks, Adam. Thanks for having us. Great to be here, Adam. I don’t know if I like your setup being so good over there. I feel like I’m on your show over there right now, guys. Come on, it’s a good setup. Thanks. We just pulled this together within the past week. So it all came together at the right time.

Well, I couldn’t tell. Well we got, we got, we got a lot to talk about today. So we’re going to talk about, of course, Energia. We’re going to talk about democratizing investing in the energy space. Before, but before we get into all that, we’ll start this episode as we start them all with. What we like to call our mission matters minute.

So Larry and Roland, we at mission matters, we amplify stories for business owners, entrepreneurs, and executives. That’s what we do. What mission matters to you? Yeah. Thanks again, Adam, for having us. So at Energia, our mission is to democratize energy investing by making it easier for investors to add direct asset level energy exposure to their portfolios.

We believe that energy as an asset class is one of the greatest ways To diversify portfolios and hedge against global uncertainty and inflation. And so we’ve made it our mission to give more people more opportunities to add energy to their portfolios. And so this vision, this is what excited me in 2019 when I joined, you know, the team as employee number one.

And frankly, this is you know, the same vision that excites me today and, and helps me get up in the morning. Thanks for having us on again. So give me a little bit of the background here. Like why energy, like what, what attracted you to, to the space? Yeah. So for myself, I mean, I’ve been in the energy industry for, for over 10 years.

So prior to Energia I began my career with Halliburton. So they have an analytics division called landmark. And I was a consultant with them for a number of years. I’ve worked with many different energy companies to try to figure out how to use technology and software to make better decisions.

And I did that for a few years. I joined Chevron previously to join Energia. Yeah. And I was there for about five years again, very, you know, data focused analytics focused. But with that job, I was focused on offshore Gulf of Mexico. And so, you know, energy frankly you know, improves quality of life for really the entire world.

And so I think that’s kind of what excites me about the, you know, the space and frankly, having the opportunity to combine my experience with energy and then now saying, Hey, let’s use technology in a new way to enable a new type of market. Frankly, that is what excites me about what we’re building at Energia.

I would, I would echo Adam exactly what what Roland just said. I think why energy specifically is over the last 10 15 years, you’ve seen democratization of assets of people actually investing at an asset level and many other asset classes like artwork, farmland, the biggest being real estate. No one’s really done it in energy.

And I think energy as an asset class lends itself to that assetization more so than many other asset classes, because returns are oftentimes driven by pure cash flows, as opposed to, let’s say, exit multiple uncertainties that you might find in, let’s say real estate or art. Wine, for example. And so, and I was thinking about that exactly what you said as I was preparing for this and I mean, for my long term listeners, you know, I mean, I was in finance almost 14 years, so in a lot of different sectors in finance and I was thinking about it and I was like, huh, like how come up to this point?

You’re right. It hasn’t really, there hasn’t been that much direct access. Like, why do you guys think that was, is there like, what, what have been the challenges? So I think it’s, it’s a variety of different things, Adam. I think. Most foremost is that it’s a very complex industry. It’s highly capital intensive.

I mean, when you’re, when you look at an oil and gas companies balance sheet, let’s say you’ve got undeveloped acreage, you’ve got infrastructure, you’ve got drilling activities. And then finally you have what we call PDPs, which are basically your proven developed producing reserves. And so managing that whole process.

is really complex. I mean, Ron was a petroleum engineer, and he would tell you that each one of those activities had its own engineering team, had its own finance team, had its own business development team. And so what we’re trying to do is basically eliminate that complexity, focus on truly what’s important, in this case, cash flow.

So get rid of some of these complexity. Capital intensive parts within oil and gas that historically have made it very challenging to invest in and just give access to cash flow for four years. Ron, let me know if I’m one kind of quick thing. I’ll add to Larry’s point as well. Right? Like, why? Why do this for energy?

You know, as we’ve talked to ultra high net worth individuals, family offices, What’s interesting is we found that, you know, those folks that have frankly access to any asset class they want to think of getting exposure to energy as an asset class, because it’s so difficult to do that. They themselves have to have, you know, had to resort to setting up their own energy companies.

I mean, that’s how hard it is. That’s how high the barriers to entry are. To this asset class. And so really it comes down to, you know, can we come up with a way to, you know, structure it or to, to use technology to enable you to not have to do that, right? Cause not everyone has the ability to, you know, set up an entire company just to gain exposure to an asset class.

Yeah. Sure. Especially for the everyday investor, even the credited investor, right? Like the barrier of entry for that versus a setting up your own company. I mean, that that’s miles apart. So what have been, what have been some of maybe the traditional ways that people have gotten some exposure to it?

Maybe like ETFs or something. I don’t know. Mutual funds. Like what, what have been the traditional ones versus now? So I think the most common ways that I differentiate there’s different types of exposure, right? Yeah. If you want pure play commodity price exposure, a lot of people look at futures, Frankly, not that many people just use because you’ve got margin requirements.

You’ve got ongoing cash requirements. There’s commodity based ETNs. For example, where you, where there’s an underlying fund that invests in oil and gas futures. The problem with that is it typically rolls to the next contract month. And if you actually look at the performance of these assets, they’ve been around for maybe 15 years.

They basically dropped like a rock. I mean, they started in like the mid and late 2010s, but their performance has been really poor because of the fact that you’re constantly paying that role on the futures. Another way is private equity, but private equity, you know, it’s pretty opaque market. There’s high transaction costs.

There’s the two and 20 model. There’s a seven year lockup period. Oftentimes you don’t quite know what the fund is investing in, and then there’s leverage on top of that. So it adds, there are a variety of different ways to invest in the sector. But in our mind actually accessing the asset level cashflow basically gets rid of a lot of these other problems that I’ve just discussed.

Yeah. And then one kind of another point I’ll add to as well, right? Like it’s easy to think, Hey, if I want exposure to energy, why don’t I just buy, let’s say either an ETF with a bunch of energy company stocks or even individual energy company stocks, which often have, let’s say You know, relatively high dividend yields.

Why don’t I just do that? But if you actually look at the economics of that, what’s interesting is that you know, the assets themselves that these energy companies hold on their balance sheet, they produce much higher returns relative to the returns that they’ve given back to investors as you as an equity holder of those companies.

And so because there’s that dislocation, we think that by providing an asset level solution to investors that it’s a superior way to have that hedge you know, that natural hedge from an energy investment on your portfolio. So I think we’ve done a good job of just kind of setting the table around like what’s out there.

Now let’s get further into energy. So tell us exactly like how it works. Yeah. So really there’s kind of two ways to Work with or get exposure to a product that energy has on our platform. So the first way is we are working with a broker dealer partner of ours. And so with that team that team is, is out there talking to registered investment advisors and broker dealers.

You know, wealth management and really trying to find investors that have those existing relationships to get, you know, the, this type of new product to their shelf, so to speak. And so we have a team that we’re building out now, and we have a, you know, one agreement for the first fund right now that we should close within the next few months here which is in the works.

And then secondly, Congrats. Hold on, first off, wait, I got to stop you there, congrats. We’re a lot of entrepreneurs, business owners that watch this show, Matt, every rung, congrats. Go ahead. Thank you so much. It’s it’s, it’s, it’s a journey for sure. Thanks, Adam. And really the second op, the second way is for folks to be able to go online, go to energy.

com, create an account with us online, and then transact directly on the energy. com platform. And so you know, we think that different investors will have different preferences and we’ve seen the same exact thing and, you know, different asset classes, like Larry was mentioning for real estate, for fine artwork.

And we think for energy investing will work the exact same way. And, and, and talk to me a little bit about the user journey and interface. Like, is this, is this easy to use when we say platform? Sometimes people expect they’re driving in their car right now. They’re like, ah, platform, a platform. Like talk to me about like, what, like what’s in the interface?

Like, is it easy to use? That’s a really great question, Adam. We we’ve spent a lot of months actually trying to improve the user journey. We’ve actually hired one of Yieldstreet’s former head of marketing to make sure from everything, from how many screens a user has to go through to the accreditation process, to the amount of information transparency that they have.

We’ve really spent many hours and many different iterations trying to streamline that process to really make it to the point where someone can review an offering, as long as they have full understanding and full transparency into what’s going on, they can transact in a matter of minutes, right? There’s a number of steps that, that we go through that we’ve fully automated KYC, AML, investor accreditation.

And we’ve really, really focused on the user experience and their journey to make sure that the process isn’t just. It’s financially rewarding for them, but it’s that it’s fun as well. And then it doesn’t create friction points from, for them, from their perspective when transacting. And one more thing I’ll add as well, right?

I mean, what we’ve learned throughout this process is a lot of times when people think of alternative investments, energy for a lot of people is not the first thing they think of. And so, you know, that, that knowledge gap or bridging that knowledge gap is, is one of the things. You know, one of the challenges that we face, but frankly, we also think it’s an opportunity in the sense of you know, what we’ve done to address that is to have a whole section on our website.

It’s our, it’s our learn section on the energy. com website to teach people. How does energy investing actually work? Like what should you look for when you’re considering adding energy exposure to your portfolio, right? What are the pros and cons to adding energy exposure to your portfolio? And so we have a whole dedicated page.

On our website to help people learn more about the asset class, man, rolling, you taking my questions over there? Who gave you my questions? I was just about to ask you about the education. I actually do want to go further into that when you’re reading my mind over here. Are these is the education organizing kind of like micro learnings where they’re short?

Is it blogs? Is it like, especially for the for the people that haven’t maybe invested in energy and gas? Like, how does it? How does it feel? So we’re doing a variety of different formats, partly because the topic of energy is just so vast, and you could write a white paper, but no one wants to read it. 25 page white paper on forecasting decline curves and oil and gas.

And so we’ve tried to make it interactive, insightful, but really neat. whatever the content is to make to find the medium by which to transport the information. So we use a lot of videos. We’re writing blog articles, we’re referencing other local newspaper articles or, or media outlets that have Discuss various topics to really try to create the process and make it as simple as possible for people.

And as educational, I always like to try to sneak in a pay it forward question in here. So this is where I’m going to sneak it in. Speak to the other, we’ll take a little detour, speak to the other entrepreneurs, maybe out there or the other, the other startups, like why, why did you find it was important to create content around, around education for your, for your users and for on energy?

Like, why did you make that decision? Yeah. So you know, one thing that comes to mind for me personally, Adam, so, you know, you could make the best product out there and it doesn’t matter in what industry, but if no one knows about it, then it’s really hard to succeed as an entrepreneur. Right. And so it’s just run.

I mean, it’s you, it’s you. It’s you, come on, it’s Larry and Roland. Everybody’s not supposed to just go. It’s your idea. And so you know, being able to, to market yourself and being able to talk to people, you know, and get your name out there, build the brand. I mean, that is so important, right? I mean, so many other.

the brand itself is, you know, what is it special about that company? Right. And so but yeah, in terms of, you know, being able to put your product out there, put your face out there I think it’s just, you know, about being persistent with that. Right. And so in terms of advice for other entrepreneurs and how they think about, you know, putting their brand out there, I think, you know, it’s, it’s all stops go essentially with that.

Well, one thing I might add, Adam, is. You as an entrepreneur, you always have some vision of what your product looks like in front of people, but an average person might have an entirely different vision of that same product. And I think a big lesson for both of us has been to delegate and try to speak to as many people as possible, you know, hire, let’s say a UX UI company that does this for a living and is able to find and optimize the best way to transmit your message.

Because I might be very passionate about making a particular point, but I don’t But there might be a better way to present that same view in a different way. And oftentimes, you know, hiring a UX, UI engineer is is hugely value add for, for first time startup entrepreneurs that are, let’s say, operating in software industries.

Well, thank you for that. Like I am, we’re, we’re huge on brand and also on creating content and also telling the stories, like the story behind the brand and why it’s created and all, I just feel like nowadays, I mean, large companies to small, having that connection, like that source of connection to something, whether it’s the first time you’re, you’re watching something or you have a contact with the company.

Sometimes it’s that contact. Versus even a person. Now, I mean, obviously person’s great, but many times you’re finding content online, you’re stumbling across something, you’re reading it. It could be watching an interview like this. That may be the way that many people will be introduced to energy or the first time.

So thanks for that guys. Just wanted to see what your, your insight was on that. Okay, now circling back to the regular scheduled interview You, you started with, and I know you’re very focused on oil and gas, but we’re talking about energy overall is, is any, is your vision for the platform ever going to expand outside of that?

Or like, like, what’s your thoughts on that? Yeah. So that, that’s a good question, Adam, the way I think of it, right. And really the longer term vision of energy is not just an oil and gas investing platform. It truly is. An energy investing platform. And so and as we think of, you know, the, let’s say traditional oil and gas assets as well as, you know, the renewable energy assets.

One of the interesting things that’s going on right now in terms of, you know, the current market dynamic is if you look at the underlying economics of the assets. The traditional gas assets typically have a, you know, a much better economics. And so the really that’s the, that’s the trick, right?

I mean, that’s the reason why at least to date, a lot of the incentive incentivization for renewables has had to be from governments, right? And so as we thought about building this energy marketplace, one thing we realized is that by building energy we think that this could be a free market solution.

To financing future renewable energy projects. Right. Wow. And so if we could, you know, build liquidity in the market by pulling in that liquidity, that’s interested in the, you know, attractive returns from traditional oil and gas. And then now we can start, you know, mixing assets together, let’s say within one fund to have, let’s say a carbon neutral fund that has higher returns.

Yeah. Than just purely renewables, then that’s one way to, you know, bootstrap the renewable energy market essentially. So I don’t know if Larry, if you have other thoughts on that to completely agree with, with what Roland just said. I think the largest pool of available capital right now, as, as you know, is private wealth.

Managers, right? They manage something like a hundred trillion dollars in assets. Just an enormous number. When you actually look at that, it’s a big number, but when you actually look about how many of them actually have energy exposure, it’s super, super small, single digits. And I think part of that is because energy doesn’t exist in the public consciousness has an asset class to give you an example.

We were doing a little bit of ad testing for our own business to determine how many people on a monthly basis search for the term energy investing on Google, and we were taking bets about, well, is it gonna be 10, 100, 000? We were shocked to figure out is something like 1300 people. Search. It doesn’t exist in people’s mind.

What that’s really low. That’s really low. wouldn’t have thought otherwise then when you think about how big the industry is, right. 100%. And so to Ron’s point, we’re trying to create a free market solution. Currently oil and gas offers the best form of returns and in the best forms of economics. But the longer term vision is to use our platform, to bring advisors, to bring the correct investors, to do all forms of energy, if you will, not just traditional forms, but the forms of energy that we will need to get to, let’s say net zero by 2050.

What’s funny, Adam is, you know, as we talk to different people about what we’re doing at Energia, you know, A lot of people I talked to what they tell me is like, Oh, I, you know, I fully believe in the renewable energy future, just as we do, and everyone wants to get involved yet. You know, the, the, the level of investment.

Frankly, it needs to increase in order to really meet that future demand, right? And so, of course, part of that solution has to be, you know certain government regulation aspect of it. But we believe, really, if you are, if you can unleash the free market on this, That this could be a huge opportunity.

Yeah. Does, does community play a role in this at all? I mean, we hear a lot about from companies about talking about building, especially investment platforms. The other thing about like building communities around that, whether it’s, of course we talk about the education piece. But I’m just wondering if that conversations had, you know, in internally at energy.

I mean, we’re, we’re always trying to build a community, if you will. We use our content to educate people. But at the same time, we use things like LinkedIn, Twitter and Facebook to spread our message around. We’re still, I would say, in, in the early stages of that. But certainly that’s where you want to get to.

You want to have a community of people that believe in your product, that basically become your evangelists and that you as a business can help you grow. And that’s that’s really at the forefront of what we’re trying to do every day. Yeah, I see that. And I, and I can even envision that. So when you think about your marketplace and everything else, and when you think about the that your vision longterm, right, of the, of the marketplace and what you want to accomplish around renewable energy, just in general investments, I’m like, man, I can, I can, or I can visualize the community already.

I’m like, Whoa, events and, and different like seminars. And we got to get the conference one day and all the other things. Things like getting people together to discuss this and the thought leadership pieces and really educating them. Because I’m like, now that you educated me that there’s only like 1300 searches, I’m going to have to have you back on another year.

You guys need to work on getting that community up because we got to get, at least get that search up from 1300 guys. Well, we’d love to be back on it. Yeah. Well, that being said what’s next? I mean, you got, you got a lot going on. You mentioned the fund, you mentioned obviously the platform where you’re at.

What’s next? I mean, what’s next for you? What’s next for the company? Yeah. I mean, as, as we were talking about Adam, right now, our kind of short term goal is to of course, finish and close this first fund that we’re a few months away from, and then from there, really fun number two, fun number three, I know we are talking about, you know, this.

Future vision of having renewable energy and having that as part of the marketplace as well, but you know, we’re kind of in the early stages of making that happen, actually. And so one of the investors in our company, for example, is an executive at a renewable energy company. And as we showed him how we, you know, you’re using technology to quantify and evaluate assets, right?

Quantify the risk of these assets. Essentially, what he has told us is, look, everything you guys are building there at Energia could one to one be applied to the renewable space. And so, you know, he thinks that he has a backlog of projects that we could host on the Energy, Energia platform pretty soon as well.

And so that’s, that’s really in terms of outlook for this year is, you know, close, close that first fund and then think through, hey, you know, what assets can we then host on the Energia platform after that?

Well, that being said, guys, it’s been great having you on. I’m excited to continue to watch the Energia story unfold to continue to watch the platform build. If somebody is watching this and they want to follow up and they want to learn more, how do they do that? Yeah, the best way to learn more about us is to go to Energia.

com. Alternatively, we’re pretty active mostly on LinkedIn as well. So you can find the Energia page on LinkedIn. Or you could find Lariat and myself as well. Feel free to message us. We’d love to, to chat with anyone who’s interested. Thanks again, Adam. Well, I appreciate you guys coming on today and thank you as always to the audience for tuning in.

If this is your first time with mission matters and you haven’t hit that subscribe or that follow button, definitely do that. This is a daily show. We’re bringing you new content each and every day. And we want to make sure that you don’t miss a thing. Larry Rollin again, thank you so much for coming on.

It’s been a pleasure working with you both. Thank you. Thanks Adam. Have a good one.