RV Fund Manager & Author: Leo Wang
In a world grappling with climate urges, venture capital (VC) remains not just as a beacon for innovation but as a pivotal force in driving cutting-edge climate solutions. Interestingly, the interplay between climate technology and VC isn’t merely coincidental; it’s a reflection of a larger shift in societal values towards sustainability and the market’s response to these changing demands.
I had the privilege of speaking with Jane Ge, the general partner and founder of Vectors Capital, a luminary whose career has spanned over a decade in the climate tech sector. Our enlightening discussion centered around her journey, the birth of Vectors Capital, the nuances of investing in climate technology, and the suggestions to juniors in VC.
From Climate Solutions to Venture Capital
Jane’s academic journey started with an undergraduate degree in energy systems engineering from the University of Toronto followed by a graduate degree in sustainable design studies from Cornell University. Her academic pursuits took her to Berkeley, focusing on climate policy in developing nations such as China. She then transitioned to consulting for cleantech startups and corporate VC to conduct practical investment in climate tech. It was during this period she identified systemic issues in the investment landscape, fostering an interest in public-private partnerships and driving changes in climate finance policy.
Her problem-solving mindset and hands-on experience in raising money for startups, including a stint with UCB’s tech accelerator and VC fund, eventually culminated in her role at Vectors Capital.
Vectors Capital: A Dream Born Out of Necessity
What made her launch Vectors Capital? Recognizing the stark contrast in the climate tech environment compared to a decade ago and sensing the urgency of the climate crisis, Jane saw it as a pivotal moment to venture into the field. Her rich experience in VC and climate tech solidified her conviction, driving her to establish Vectors Capital as a beacon for future-oriented climate tech investments.
Unique Value Proposition of Vectors Capital
Vectors Capital seeks to look beyond traditional VC profit metrics. Instead of banking on a single massive success among many attempts, they aim for consistently successful investments. Vectors Capital isn’t just about providing monetary support. They emphasize equipping founders with tools for success, considering themselves not just investors, but coaches. They insist on meticulous roadmap planning, milestone precision, and preparedness, recognizing that each decision in a startup’s journey can make or break its future.
Assessing Potential Investments
The criteria for evaluating potential investments are multifaceted. While startups need to align with Vectors Capital’s focus on climate tech, the financial viability is also vital. They expect either a minimum 10x cash return or a robust 30% IRR.
But numbers alone don’t make the cut. Their checklist delves deep into both the tangible and intangible aspects of startups. While technology, scalability, and the viability of the solution are key, the human side of things isn’t overlooked. They pay keen attention to the founder’s aptitude, trustworthiness, execution capability, and resilience.
Most importantly, Jane values the mindset and adaptability of founders. They lean towards companies with founders who are coachable, believing that a receptive and growth-oriented attitude can make a significant difference in a startup’s journey to success.
Climate Tech Investment vs. ESG Investing
ESG investing focuses on evaluating companies in public markets using impact scores. While ESG scores can guide investments, they don’t necessarily lead to investments in genuine climate change tech, which is directly developing technologies to solve climate change. Jane aims to fund true climate tech solutions.
Advice for Aspiring VCs
Surprisingly, her advice to those looking to break into VC was not to aim for VC immediately. Instead, she emphasized gaining industry experience first to better understand what are practiced in the real world. Once in VC, the key to growth is broadening one’s horizons and amassing real-world industry experience.
VC, in its essence, has always been about future-forward investments, but with entities like Vectors Capital, it’s now also about ensuring a sustainable and thriving future for the planet as the climate crisis intensifies.