HIKE Capital rides green wave to seize future

HIKE Capital, a leading founders’ fund in China, has been committed to seizing the opportunities that emerged in the new era

As the world is undergoing an energy restructuring, HIKE Capital, a leading founders’ fund in China, has been committed to seizing the opportunities that emerged in the new era, which has been shaped by carbon reduction and digital technology.

Anna Xu. The founding part

“Each generation has their own mission. As part of the huge wave of carbon neutrality and the historical opportunity of industrial restructuring, we have chosen to be All in.” Anna Xu, founder of HIKE, shared HIKE’s efforts and vision in investment opportunities created by China’s shift to a carbon-neutral economy at the SuperReturn 2022 held in Singapore on September 20.

Transition to an e-mobility future

With carbon neutrality being a new consensus and most pressing mission, major economies, including China, have announced massive investment plans involving upgrading technology and changing consumer lifestyles, led by the booming electric vehicles (EVs).

As the world’s largest auto market, China has been a global leader in the EV sector – China’s EV sales amounted to 2.9 million units in 2021, accounting for 61% of the global market.

HIKE had held a firm faith in EV long before it became a popular option in markets. With the vision, HIKE invested in China’s EV maker LiAuto as early as 2017 and the company has become a frontrunner in the field, being listed in NASDAQ and Hong Kong.

Apart from the power supply change, the auto industry is undergoing another transformation – as Marc Andreessen predicted, the software is eating the world – cars are no exception.

The new generation of EV is striving to offer a rich user experience – a process similar to what the cellphone market went through – digitalization and IOT bring permanent change and those who miss out will fail eventually.

At the crossroads of electrification and intelligentization, HIKE is exploring various opportunities in transport, from electric scooters to electric airplanes.

Megatronix, an Internet-of-Vehicles company in which HIKE made an angel investment, has grown into a unicorn in just four years and now cooperated with 20 major carmakers.

China’s EVs are on track to reach 20% nationwide penetration this year, and expected to be 40% – 45% by next year.

“20 years ago, Chinese mobile-phone OEMs started to grow; 10 years ago, Huawei, Xiaomi, OPPO set off for the world; I’m positive that a Chinese name will become a global brand in the automotive industry as well,” Xu said.

HIKE and partners’ Zero-Carbon attempts

As a signatory to the United Nations-supported Principles for Responsible Investment (PRI), HIKE prioritizes sustainable development and incorporates responsible investing practices into its operations.

Aligning with its investment partners, HIKE has kept its commitment to environmental, social, and governance (ESG).

LiAuto’s ONE plug-in hybrid electric vehicle produces 236.1 g of carbon dioxide per kilometer, summing up to 35,415 kg of emission during its full life cycle, lower than most NEV SUVs of the same class.

By carrying out energy-saving actions such as residue heat recovery and temperature control, LiAuto significantly reduced energy consumption during the vehicle production process, saving 200,000 cubic meters of natural gas, 770,000 kWh of electricity, and 460 tons of CO2 emissions per year.

Halara is another good example of how ESG and digitalization drive changes throughout the supply chain. As a new player in the field, Halara has significantly reduced product waste by using innovative eco-friendly fabrics, and it has reduced inventory turnover to 35 days with digitalized factories in China, compared with 100 days for the main competitors.

HIKE also invested in AI pharmaceutical research firms such as XBIOME, OnQuality Pharmaceuticals, and Artivila Therapeutics to explore how digitalization and AI can help drug research and development, eyeing long-term contributions to human health and wellbeing.

“Zero carbon is the action that needs to be taken to overcome development bottlenecks. And digital intelligent technology is the key.” Xu said.

HIKE – Founders’ Fund

HIKE was founded in 2015 by those who built their own success from the ground up: Mark Yang, founder of two companies, CARS Group and Ganji.com, both of million-dollar market value; and Anna Xu, founder of NetEase news app, a well-known app in China.

“My team and I visited 100 smart factories in China last year. We see how the supply side is digitally transformed, how energy shortages impact, and how digital production processes are used in plants. We see that a growing number of Chinese companies are able to serve the global market.” Xu said.

As a Founders Fund, HIKE’s eco-system comprises top-tier entrepreneurs, who can provide the founders with core resources and accompany them to break through the limit.

HIKE currently manages both USD and RMB Venture Capital Funds focusing on investments across consumption upgrades and technological innovations.