Justin Stevens
Justin Stevens is the Founder and CEO of Overlap Holdings. He has extensive experience in investment management, business building, finance, tech, operations, impact, sustainability, and corporate governance. Prior to founding Overlap, he was a Partner at Apollo Management, where he played a key role in a number of intrapreneurial efforts. He has also been an active investor in frontier tech markets and a formal Advisor to Impact America Fund
I think that's why we're not using the term 'impact', because I have too much respect for the impact of the world and ecosystem to claim that we are having an impact if we can't measure it. A lot of times, we can't. So we've gone with another word that shows that we have the same cause, but we can't always prove it to you. The simple answer is no, you can't always point to it.
— Justin Stevens
Interview transcript
That's super interesting. Can you tell me what the initial spark was for starting Overlap Holdings?
Um, you know, I really enjoyed my work as an angel investor. During my time at Apollo, I was doing angel investing and found that frontier tech founders really valued the experience that I brought to the table. I have experience in early and late stage investing, East Coast and Wall Street and Bay Area capital sources, debt and equity structuring, and bull and bear markets. Being able to guide founders through their capital raising journey and connect them to the right people is in high demand. In some cases, I even connected founders to their lead investors. Eventually, I started getting invited to participate in a lot of great rounds where a great VC was leading the round. Whether it be NEA COSLA, Union Square Ventures, or firms like that, the demand for what I was doing and the value that I was creating were signs that I should really focus on this full time and hire a team to help me execute my strategy.
That's pretty interesting. Did I understand correctly that you're mainly focused on climate and robotics?
It's all frontier tech, which for us means probably a half dozen verticals and 77 verticals in that right. But, you know, life science, material science, climate, and robotics, all viewed through a world positivity lens. The fortunate thing is that in those sectors, if someone were to start a new life science company today or a new climate or a new material, 95% or more of those companies would have a clear world positivity thesis anyway. If you're curious about our definition, we've decided to go with the term "world positive" instead of "impact" because, as you probably know, one of the key thresholds of impact investing is that you have a clear outcome or output to act on. You can point to the specific way that what you're doing benefits the world, which is obviously super important for most impact investing. The one thing that you miss is that in some cases, when people are creating breakthrough technologies, they could have a dramatically positive effect on the world by rapidly increasing productivity. But you can't exactly point to what that's going to be today. Two examples from history are the printing press and electricity. The printing press had an amazing impact on the world and literacy and accelerated so many things. But when Johann Gutenberg was asking for investors, if he had applied to impact investing, he wouldn't have gotten it because he couldn't point to how he was going to cause the reformation of the church. Electricity was really a product for industrialists and the super rich when it first came out. But it turned out to be this incredibly democratizing force because of its productivity standpoint. So the point is that with "world positivity," we think of the definition of investment, but also if there's some massive technology that could have a huge breakthrough in productivity that could increase the livelihoods for everybody, but we don't know exactly how it's going to work yet, we are allowing ourselves to invest in that as well. Quantum computing is probably a good example of an area like that, where there are probably going to be a lot of benefits for people, but we can't tell you right now what those are going to do.
Can you name a successful project that you have seen or heard of during your time at Apollo? If so, what drew you to that example? If you are unable to, that is also fine.
So, I'm just trying to understand what's most useful to you. There are many ways I could ask the question. Are you looking for examples of impact investing? Would you prefer to focus on the later stage investments I made while at Apollo, or the earlier stage ones? Or do you want me to discuss areas where the two overlap?
You can do both? Yes, we can do both. I think those are like two sides of the spectrum, and you will probably encounter different problems. It will be interesting to hear your perspective on what stood out at Apollo at a later stage, when you were able to see certain things more clearly, compared to a situation where you are currently in the beginning stages and joining companies that are also in the beginning stages.
Yeah, no, absolutely. Um, you know, I think at Apollo, the focus on impact is really about impact at scale. Taking large industrial companies with a fundamental part of their thesis, their business model, right. It's called linear with making the world a better place. What we did is we had a bunch of representative transactions that we looked at when we were building it out to say, "Oh, these are good companies that Apollo owns that are doing really good things." One was a supermarket chain in food deserts that was able to offer produce at a low cost. Normally, produce is the expensive thing, and therefore, people live with packaged stuff. But their game plan was to lure people in with the produce at a cheap price and then sell their private label goods at somewhat of a margin. The good thing is that their client base was kind of lower income, lower middle income, people in those markets, so they really were providing healthy quality produce and fresh stuff as their fundamental business model in areas and regions that needed it. So that was a good example. Another was a historical deal that was actually the first provider of satellite internet for homes, which obviously helped lower the digital divide in rural areas where people didn't have access to wired telecom. Those are two examples that we use at Apollo. If you don't mind, I'd rather not use names.
Yeah, that's perfectly fine.
Then, in the frontier tech side, I've only been doing this for a couple of years, and many of these companies take a long time to form. So I haven't yet had companies that are really making drastic changes in the market. But we have invested in a number of companies that use carbon as feedstock, right in the early stages. The concept is, can you take carbon dioxide or waste, and use them as the building blocks of making a product that used to be made out of oil and natural gas? That movement is something that I find very interesting. It is a trend that we want to participate in, because we know how much we need to reduce emissions, and we're nowhere close to that number. Emissions reduction is necessary for society, but if we can start using those emissions as a feedstock instead of just an annoyance, we'll see much faster progress in capturing those emissions in a way that will really move the needle.
When you look at maybe those examples from Apollo, simply because you were able to see them at a later stage, do you notice not only the good examples, but also the bad? What would you say are some of the key blockers or biggest hurdles you come across, or that you see companies come across, in order for them to deliver on the impact?
No.
Well, I think that the beauty of impact is its alignment with your fundamental values. It's not just something you do on the side; it's a core part of your business model. The goal of doing business should be to make the world a better place. If your business model is sound, the beauty of impact is that there aren't headwinds, but tailwinds. Governments don't regulate against you; they subsidize you. Customers are excited to use your product. So, I think it's much more about creating a business model that actually works. If you do, then everything else will help you on your journey towards making an impact.
Hmm. So yeah, that's interesting, because I kind of assumed (and that's just an assumption) that the government has bureaucratic issues that someone faces. But it doesn't make sense that if the business model is there, everything else kind of helps you be more aligned. With that in mind, what are some of your favorite impact-driven initiatives that you've seen, apart from the two that you've highlighted? Is it somewhere where the business models start from the beginning, or is it more like there was a need and then the business shifted towards it as it continued?
I tend to like companies that are pure-play, you know, that have this in mind, kind of like day one. I think that's the best way to make sure that what they're trying to do is genuine and sincere.
Hmm. I'm thinking, what would you want the legacy of your work to be in 40 years if you were to look back on all the work you've done in the future?
Yeah. And I thought that I spent a lot of time thinking about that, right? I want to help accelerate the pace of positive technological change. I think that by helping more companies succeed in frontier tech, by giving them access to capital and guidance, and more efficient capital, I can help and enable more of these great founders. To me, it all comes down to the founders, right? They're the ones doing the real hard, heavy stuff, and I just want to make their lives easier. And if we can systematize the process by which we do that, then we can really make more of these great technologies come to light, and we can make the world a better place.
Just like tapping a bit more on this, what about the founders and advising them? What would you say is the biggest area that founders need help with in the assistance, support, and guidance that Overlap Holdings offers?
It's definitely figuring out their fundraising journey over time, right? Because these are capital-intensive sectors. So, helping them understand how to raise their seed round, how to raise their A round, which investors are likely to be a fit for them, and which aren't. Also, advising them on how to position their company, how to think about how much money to take, and providing tactics and strategies related to funding. I'm not looking to just have a peek under the hood.\
I'm just curious, do you use any technological help to figure out how to map or find the best fit for them?
Yes, we have a super robust database that we've built ourselves in Notion. Our Chief of Staff is outstanding at building this. Basically, what we've done is taken equity and debt investors. We have an ingestion form where we walk them through and have them click what industries they're in, what check sizes they write, how they approach, what their red flags are, the types of things they like to do and don't like to do. We ingest that into this database. Then, we utilize a database where a company says, "Alright, we need equity funding," or "When you get funding," we put in that company's parameters, hit sort or filter, and see exactly which investors spit out that they should be talking to. You need to do something like that in frontier tech and venture because there are several hundred investors, all with very specific parameters, what they like and don't like, and there are a whole bunch of dead funders as well. If you're just sending random deals to people that aren't a fit, they get sick and you really fast. As opposed to if you have precision and say, "This is exactly what you want," then people are excited to get your email because they know that it's going to be something that they're curious about.
That makes a lot of sense. I believe LexisNexis is a tool that people use for grants and fundraising for nonprofits and similar things. So, it's just like that, but on a much larger and more detailed scale. Since we have a few more minutes left, I wanted to ask about the work you mentioned that focuses on long-term gain. How do you help the founders and the people they're trying to raise money for see that balance? Traditional investors may be more focused on short to medium-term gains, and the long-term aspects may be harder to see or understand.
I think the fortunate thing about frontier tech is that everybody has a kind of long-term vision, right? People know that it takes a long time to realize these investments, and founders know they're in for a long run. So you don't have the same kind of short-term grab that you do in things like crypto or software. I think, in general, you're speaking to a group that already understands that, which makes life easier.
If we were to name off the top factors that founders look for in terms of impact, what would they be? Is it diversity of the people they can impact, the number of people they can reach, or the frequency of benefits they can provide? What are the most common areas that people target, in your opinion?
You know, I think you could talk to ten different people and get ten different answers. I also think that over the last decade, there has been a coalescing of the environmental/climate focus people and their social/economic/justice counterparts into the umbrella of impact. If you talk to the first camp, they will say, "Social justice is important, but if we don't save the planet, none of it matters." If you talk to the other camp, they'll say, "Well, we saved the planet, but if it's still cruel to people, then what have we done that's useful, right?" So that's one example of different filters. Some people like to be very analytical, while others feel that getting too analytical is a false precision. I really think it depends on the group, but the key in impact is not to try to boil things down to one number. Instead, have an honest dialogue between investors, their LPs, and their target companies so that everyone understands what they are driving to accomplish.
It's interesting to consider if there was one button or solution that could wipe away the biggest pain point or blocker in your job. What would that be?
Um, I don't know, I don't think I have a good answer for that one.
That's OK.
I'll tell you exactly what it is. The world of granting money, not like grant institutions, is incredibly disorganized. There's no central repository, and every group is doing their own thing. It's amazing how little efficiency there is. Right now, we don't have the bandwidth to focus on the problem, although we've tried to do it a little bit. This is probably the most frustrating thing to me.
Yes, because they don't... I worked on a project for a short time where the team tried to use AI for natural language processing to help companies fundraise better. However, it encountered difficulties in the grant-making world due to the lack of organization and scalability. Although companies in the US are legally required to disclose grants under 990 forms, it's challenging to make this information accessible to others. I understand this challenge.
I think our time is up. Simona, do you have anything else to add? If not, I'd like to thank you for your time. Can we reach out to you later with questions or to bounce ideas off of you?
That's totally fine. I'd say email is probably general easier than calling going forward but obviously happy to help anytime.