HOUSTON—The Independent Petroleum Association of America (IPAA) Private Capital Conference on Jan. 25 brought together several hundred professionals with the goal of learning more about how private capital is fueling production growth. Moderated discussion featuring expert panelists delved into A&D, new capital sources, and current market trends as well as traditional finance and innovative product structures.

Buddy Clark, Partner, Haynes and Boone, LLP, moderated the first panel of the day, titled “New Capital Sources,” which took a look at a range of subjects from the perspectives of panelists that included Jesse Bomer, partner, Edge Natural Resources LLC; Jeffrey W. Miller, CEO and managing partner, Vortus Investments; Preston Powell, principal, Carnelian Energy Capital; James Row, managing partner, Entoro; and David M. Zusman, managing partner, Talara Capital Management.

Following a brief company overview from each member of the panel, Clark gathered questions from the audience and posed them to the speakers.

One interesting question from the floor addressed how teams that have an idea and do not have a property manage the timing aspect of committing on an acquisition and arranging funding. The consensus was that while an asset might not be necessary, it is desirable.

Miller provided examples of two situations in which Vortus Investments liked a management team that did not have an asset. “One of our hard and fast criteria is that we always close into an asset,” he said, but in these two instances, his team spent a lot of courtship time with the management team and technical staff. Eventually, he said, “we ran into something we thought we could marry up with.”

For Carnelian Energy Capital, an asset isn’t essential, Preston says. What is needed, is a specific strategy of what a management team wants to do. “The team needs to have strategy and experience that dovetails with what they want to do.”

Talara Capital Management takes a similar position. There is no hard and fast rule on dollar commitments, Zusman said, “but if someone has too much money, they don’t take enough risk, and if they do not have enough, it’s a lottery ticket. And we don’t want that either.”

His company focuses on bringing out capital at an inflection point. “It’s very thesis driven,” he said. “There is definitely an asset focus and an approach to bringing full funding to the table when a very transparent development plan is baked.”

Perhaps the most interesting element of the panel discussion was the outlier, James Row from Entoro, who talked about the future of digital investment banking and raising capital.

According to Row, technology-enabled investment banking will allow faster, more effective and more efficient capital-raising through platform-optimized execution. A small blockchain advisory group is evaluating how to exploit three segments: cypher trading, services, and infrastructure. Row contends that this innovative approach solves a range of problems inherent to the existing process of raising capital, which is costly, manual, paper laden, fragmented, lacking in transparency, fraught with risk and has a high failure rate.

“The solution is an online private placement platform that democratizes the capital raise process for the benefit of investors,” Row said. “This approach differentiates Entoro from the rest of the space.”

Clark’s response, “It’s almost as much Greek as it is new technology,” characterized the new approach appropriately for many of the listeners, but if Row’s vision is accurate, Entoro has broken ground on a disruptive approach to financing.