The PEVC Conference was held over five days and featured keynote addresses, fireside chats, and a variety of panels moderated by current Tuck students. The first four days of the conference focused on Investing for Sustainability and Social Impact; Diversity in Private Equity and Venture Capital and Minority Participation in Private Equity; and Venture Capital and Entrepreneurship. The fifth day offered eight panels covering energy, SaaS, infrastructure, and healthcare in PEVC; Tuck alumni entrepreneurship, and more. Roger McNamee T’82 closed out our conference with his insights on "Big Tech at a Crossroad" and musical talents! Below, PEVC fellows share key highlights and takeaways from this year’s conference.
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On the topic of a lower carbon economy, Hildebrand suggested a fast transition could lead to political and economic fallout. Meanwhile, setting goals for a longer time-horizon would give economies time to adjust, reducing joblessness and other painful side-effects derived from the departure from fossil fuels. Hildebrand finished up by underlining the importance of courageous leadership in weathering the challenges associated with our rapidly changing global economy.
John Rhee, Chairman of Stratis Impact Capital and President of SolarWindow, kicked off the impact investing evening session with a keynote address on cleantech investing. Rhee walked through the history of renewable energy innovation and its growing importance in our lives. He spoke to the ongoing market shift towards renewable energy generation and consumption, and how this trend is projected to continue growing though 2040 and beyond. He talked through several of renewable energy generation and storage solutions, with an emphasis on solar technology and it’s potential applications with ultra-thin, liquid, and transparent solar generation on windows within the buildings, transportation, and agriculture sectors. He continued to discuss the large market size, increasing demand, and continuous technological innovation as clear indicators of how renewable energy generation has the potential for attractive returns and tremendous environmental impact.
The first panel session of the conference was joined by Dave Kirkpatrick of SFJ Ventures, Julia Brady of Valo Ventures, David Yeh of 3x5 Ventures, Geoff Eisenberg of Ecosystem Integrity Fund, and facilitated by Tobin Krieg T’21. The conversation kicked off with an introduction of climate tech, broadly defined as solutions for our climate and sustainability crisis that keep our planet habitable, which cut across the energy, water, agriculture, transportation, building finance, and IT sectors. We’re on a path to a net zero world and these hardware and software technologies are focused on our transition within each of these sectors.
The panel then dove into the trends in climate tech, there has been an emphasis on capital-light and proven technologies after the cleantech 1.0 boom and bust, and now we’re seeing a shift back towards excitement to invest in capital intensive and risky technologies. There might be room for both because there is so much capital available. There is also a shift from fixed energy production to distributed, what it means for empowerment of consumer and a more democratic access to renewable and clean energy. The emergence of a marketplace for carbon credits is an interesting new development, but it is still nascent and the complexities around it’s verification and monitoring are complicated. The advancements in climate risk analytics will help to spur private sector change, the ability to leverage data for decision-making around risk exposure will help facilitate the transition towards a net zero economy and accelerate adoption of climate tech solutions.
The discussion then shifted to the process for evaluating the potential impact of a start-up from a sustainability perspective when considering an investment opportunity. The panelists shared stories about supporting portfolio companies once an investment had been made, highlighting that climate tech start-ups face the same challenges all start-ups face. The panelists also talked through the expansion of exit opportunity for climate tech start-ups, highlighting increasing demand from incumbents to transition through strategic acquisition and the increasing ability for climate tech firms to go public. The overarching theme of the discussion is the growing excitement around climate tech firms, and the success the panelists have seen from sourcing, evaluating, investing, supporting, and exiting climate tech start-ups. The conversation also discussed the new administration and its positive impact on the industry and the hopeful outlook for where climate tech is heading over the next decade.
Gender Diversity in Private Equity and Venture Capital
The gender diversity in investing panel had representation from partner-level panelists, Christina Pai D’00, Toan Huynh, Cassie Young T’11, and Meghan Cross Breeden, with experience in corporate venture capital, venture capital with a focus on female-founders, and private equity with some panelists being former co-founders and operators at high growth companies. Much of the conversation centered around the career moves that the investors had taken to excel in their careers and their commitment to “being the first but not the last” by supporting the female investor community. The discussion ranged from the importance of founder empathy and operating experience as key components of career success to the support of founders and their teams during COVID-19 on matters such as the upcoming U.S. election, the Black Lives Matter movement, and mental health. There was also commentary around mentality shifts on limited partner side in terms of supporting diversity both in terms of gender and minority representation.
During the panel, the group also discussed how women-founded companies have lost recent gains due to COVID-19’s disproportionate impact on women entrepreneurs and how there is still much work to be done to increase diversity for founders and investors. Christina Pai recommended that aspiring female investors have a “join us” mindset that focuses on inclusion in the investing world and promotion for female founders and management teams. Lastly, the panelists gave advice to current students that operating experience, specifically in growth roles, where one can amplify revenue generation areas of business or product management, can catalyze a future high-impact career on the investor side.
Fireside Chat with David Grain
On Wednesday, February 3, Dean Matthew Slaughter hosted a fireside chat with David Grain, the founder and CEO of Grain Management and an alumnus of the Tuck School of Business. David spoke about his career in the telecommunications space, his path towards founding his own Private Equity Firm, and his successes and challenges in being an African-American firm founder. Participants asked many engaging questions, and David offered advice to those looking to start their own firms, as well as his view on pivoting within the telecommunications industry. Read more on Grain’s session.
Fireside chat with Marc Jones
Marc Jones, Chairman and CEO of Aeris Communications, a leading provider of internet of things solutions, joined for the Day 3 fireside chat in which he shared insights on the path he took to his current role and advice for current MBA students. From a young age, education was the cornerstone of his growing up and one of the most important aspects of what his parents provided him – especially his mother who, after getting married at 19 and having two kids, went on to complete her undergraduate, masters, and PhD degrees. Marc was inspired to study law by a friend’s father who defended Bobby Seale of the Black Panthers among other African Americans fighting for social justice. We have all been reminded of the treatment of Bobby Seale in the recent Netflix movie “The Trial of the Chicago Seven.” As a law associate at Pillsbury, Madison & Sutro, Marc became a securities attorney rather than a litigator because it was the only opening the firm had and he gained incredible transaction exposure in the technology space. This sparked an interest in technology banking because his work was focused on tech-oriented public offerings, private placements and M&A.
Through this period and his time in investment banking at L.F. Rothschild, Unterberg & Towbin, Marc learned the value of mentorship. Pillsbury partner Bruce Mann took Marc “under his wing” and was critical to his evolution, both at Pillsbury and after bringing him along to L.F. Rothschild. Bruce gave Marc the cover he needed to learn and build relationships in the space – especially with others who were skeptical of him because of his race. Marc admitted to succumbing a bit to the feeling of “imposter syndrome,” where he was viewed suspiciously as the only African American in a room of company executives, lawyers, investment bankers and accountants, but his relationships with mentors were critical to overcoming this. He offered, “It is not just what you know, it is being able to be comfortable to talk about what you know in the setting you’re in.” Marc was open and direct about the challenges he faced as an African American in law, investment banking and executive management in Silicon Valley, which was extremely rare at the time, and expressed gratitude to those who fostered his career development along the way.
Marc eventually joined Chips & Technologies to learn about managing a company from the “inside.” Although this career move involved taking a meaningful pay cut, Marc advised that making a career-oriented decision like this can still pay off (like it did for him). Eventually, this led him to becoming the #2 executive running 90% of Chips & Technologies business, to the President role at Madge Networks, where he led the company through an IPO and CEO at Visionael Corporation. Marc retired to spend more time with family and serve on boards, one of which was Aeris, which later asked him to become first Chairman, then CEO. At Aeris, he led a buyout of the company from its existing investors, and today, he and the individual investor friends who backed him own 96% of the company. He advised that the skills necessary for building successful businesses are best learned through real-world practice. Marc also advised that as leaders, "hire people who are better than you – don’t be the ceiling for the organization.” Moreover, part of having a long-term vision as a leader, more than just having an eye towards the quarterly/annual reporting horizon, is also finding ways to use a company’s skills and assets to solve problems for social good. Through its work, Aeris has helped international refugee migration, rural farmer access to tractors, and clean water initiatives in India, which have not only had social impact on those communities but have also served to create a stronger employee culture at Aeris which culture has benefited their main lines of business.
Private Equity Investment Trends in Energy – Panel Highlights
The panel of energy industry advisors, executives, and investors from around the globe convened to discuss the current state and future of private investment in energy, particularly highlighting the investor perspective on the energy transition from fossil-based to lower-carbon energy sources. Key topics discussed included the growth in and maturation of private investment in renewables, the intertwined nature of the conventional and renewable energy markets, and changing investor demands related to return profiles, subsector exposure, and ESG factors. All panelists agreed that the energy transition is underway and highlighted different investment challenges and opportunities presented by this momentous shift in the status quo.
Thad Hill T’95, the President and Chief Executive Officer of Calpine Corporation, provided a power generator’s perspective on how decarbonizing the economy has catalyzed the further electrification of our lives and the investment required to support such a technological overhaul. “Electricity is already a huge part of our lives and economy,” he said, “and it is only going to get bigger.” The energy transition represents “a very big, diversified, and highly investable space,” said Dan Revers T’89, the Managing Partner and Founder of ArcLight Capital Partners. Both noted the important role natural gas power generation will play alongside renewables in the electrification of the energy economy. NextEra Energy executive Mark Hickson, whose firm has made significant investments in renewable power, went a step further in his assessment. “We are just at the beginning of this energy transition,” he said. “I think we’re going to see a pretty significant ramp-up in renewables across the system.”
Frank Hermelink T’05, who leads Morgan Stanley’s European Power and Utilities investment banking team, noted how compressed returns in traditional private investing in the energy industry and related sectors have incentivized private equity firms to deploy capital in new ways – through infrastructure funds (which typically have lower return requirements) and through more global investments, especially when considering renewable development. Though returns have declined over the last five years, the lower costs of capital, combined with the enormous amounts of uninvested “dry powder” funds controlled by private equity firms, have been a boon for operating companies. Mr. Hickson pointed out that NextEra has been able to take advantage of this abundant, cheap capital from private equity firms to jointly develop new renewable projects. Mr. Hill, however, pointed out that the lower-return environment may force private investors to rethink the available exit opportunities from these energy assets over the medium and long term.
Mr. Revers highlighted the growing significance of environmental, social, and governance (ESG) considerations across energy industry investment. “Over the last five years, unless you have really embraced an ESG program you are not going to raise much capital,” he said. “We are making sure that ESG concerns are looked at throughout the entire investment process.” Mike Allison, a Senior Managing Director at Stonepeak Infrastructure Partners, concurred by noting that private investors must be “very thoughtful around ESG policy in [their] overall investment strategy within firms if [they] want to continue to raise capital.” Though ESG considerations will help drive private investment into renewable power generation and clean-energy technologies, all of the panelists acknowledged that the energy transition will be gradual, and there will continue to be private investment in more conventional sources of energy like natural gas.
The panel closed with a discussion of future growth areas for energy investment, which panelists identified as hydrogen-sourced power, battery storage, carbon capture and sequestration, distributed energy, and supporting networks and systems. Mr. Allison and Mr. Hermelink identified East Asia as a destination for increasing private energy investment, in addition to North America and Europe. As policymakers and regulators increasingly target carbon emission reductions, private capital will continue to play an important role in the energy transition. “Everyone is trying to figure out this space, and I think that’s what makes it really exciting from an investment standpoint,” said Mr. Revers. “I don’t think there’s been a more interesting time to get a job in the energy industry.”
Other panel topics included: Investing Across the Software/SaaS Spectrum: Venture Capital, Growth Equity and Buyouts; Private Credit and Hybrid Equity/Credit; and Private Equity: Preparing for an Exit Panel.
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