Switching from a tech investor to earth warrior, Hong Kong’s richest man Li Ka-shing, nicknamed “Superman” for his deal-making acumen, is renewing his battle jersey and investing in groundbreaking or novel targets.
Known for excelling in the Hong Kong finance world with his unique and long term vision, Li, 92, has been scaling his investments in ESG-related startups via his private investment firm Horizon Venture for years, before HKEX started requiring companies to provide an ESG statement in July last year.
Horizon Ventures solely manages Li’s private investments, which are centered on disruptive and technology startups. Some of its most successful investments include big names such as Spotify, Facebook and Impossible Foods, in their early stages of development.
Horizon’s bet on Zoom early in 2013, which was worth about USD 850 million at the point of the company’s US IPO, has surged to USD 10 billion before the share transfer, when the company’s video-conferencing service became essential to millions of corporations worldwide amid Covid-19 lockdowns.
Other than innovative tech startups, the firm has been investing in sustainable projects since its funding of Varden, an Australian startup focusing on sustainable packaging materials, in 2014.
At an agri-food summit in Singapore in 2019, Solina Chau Hoi-shuen, Horizon co-founder, shared the story behind Li’s efforts on climate change and sustainability.
“Mr Li was playing golf a few years back, and then his granddaughter visited him, and while they were crossing the road, a lorry passed by. Mr Li said a balloon of black smoke blew right into her face. And he was like oh my god, you know the pollution is real”, she said.
ESG investing has become a hot topic in capital markets worldwide. Many ETF launches this year are ESG funds by well-known issuers such as SPY. QQQ could launch an ESG version by the end of this year.
According to JP Morgan, funds linked to companies’ ESG performance doubled in Asia to USD 25 billion last year from USD 12 billion in 2019. China is quickening its ESG effort and issued a final set of ESG-related risk disclosure rules for the first time in June.
If you want to join Superman Li’s rescue squad, or simply want to make a fortune from the ESG wave, we’ve identified three startups in Horizon’s portfolio that should be on your radar, from coffee without coffee beans, to hydrogen energy.
Total funds received: USD 11.6 million
In this generation, we have been striked with meatless meat produced by Beyond Meat and Impossible Foods, but now their investors are eyeing on coffee without coffee beans.
The most common arabica beans are likely to lose 50% of its habitat in the next seven decades as they are planted in shrinking regions under global warming. Farmers would have to shift their farms to cooler areas and accelerate deforestation.
But Atomo’s coffeeless coffee is made from upcycled ingredients like sunflower seed husks and watermelon seeds. Using upcycled materials means they are further contributing to sustainability by partnering with local US farmers and giving their plant waste a second life. Then, the ingredients would undergo a chemical process to produce molecules imitating the taste of the real coffee. (And, they come with caffeine!)
After investing in Impossible Foods, Horizon Venture is fuelling Atomo Coffee’s project on producing molecular coffee, along with S2G (investor of Beyond Meat), AgFunder and Bessemer with a total fund of USD 11.6 million after 3 rounds of fundraising.
In Horizon Venture’s recent media presentation, the firm stressed its latest focus on synthetic biology investment, “We invested in synthetic biology projects because we believe that will be a very important technological innovation that will affect our future,” said Solina Chau.
Founded in 2019, the Seattle-based company has already rolled out around 1,000 cans of its cold brew coffee in September. The motivation behind the project is to protect one of the most vulnerable industries susceptible to climate change.
According to a tasting review on Bloomberg, the coffee lacks bitterness but is “refreshingly smooth with a lingering sweetness on the palate”.
In 2020, the global coffee market was valued at USD 102.02 billion and is projected to reach a compound annual growth rate of 4.28% during the period from 2021 to 2026. With Europe already being a mature market with strong cafe culture, other countries in Northern America, Southern America, Asia And Oceania are gradually welcoming coffee in their daily lives.
Total funds received: Approx. USD 75 million
According to BloombergNEF, the aviation industry itself contributed more than 1 billion metric tons of carbon dioxide to the atmosphere in 2019. Hydrogen combustion is estimated to reduce climate impact from aviation by 50 to 75%, and with fuel-cell technology by 75 to 90%.
But ZeroAvia is expected to launch the first zero-emission and hydrogen-fueled aviation powertrain in 2024.
The London and California-based company’s mission is to cut carbon emissions from the aviation sector by replacing fossil-fuel-run propulsion with a hydrogen fuel-cell system.
The company’s powertrain would require lower operating costs than its jet-fuelled competitors due to lower fuel and maintenance costs.
In less than four years, ZeroAvia has become one of the most heavily funded ESG companies in Horizon Ventures’ profile as it has raised approximately USD 75 million from 16 investors over four rounds of funding. Some of its star investors include British Airways, Amazon’s Climate Pledge Fund and Breakthrough Energy Ventures, which is backed by Bill Gates.
Other than big name investors, the UK Government has granted GBP 2.7 million in 2019 to the company for its development of zero-emission commercial aviation, followed by a grant of GBP 12.3 million (USD 16.6 million) to help the company deliver a 19-seat hydrogen plane to the market by 2023.
The company is poised to be a game changer in the aviation industry. In September last year, it completed the world’s first hydrogen-electric passenger plane flight with a Piper M-class six-seat plane. The plane was the largest hydrogen powered aircraft at the time.
With the successful trial, the company is said to accelerate powertrain development for 50+ seat aircraft and 19-seat aircraft programs after several rounds of funding this year.
Industry: Renewable Energy
Total funds received: USD 32.2 million
Hydrogen can make a crucial change to decarbonise industries from steel and cement to transportation by replacing non-environmentally-friendly coal, oil or natural gases, but industries are hesitant to use green hydrogen because of its high cost.
Israeli startup H2Pro is working on a new water-splitting technology producing the world’s cheapest green hydrogen for a wider scale use of sustainable fuel.
Backed by Bill Gates, Sumitomo Corp and Hyundai Motor, the company has attracted USD 32.2 million from 10 investors over four funding rounds.
Horizon’s Chau revealed that hydrogen is part of the firm’s wide-ranging sustainability cluster, and lowering the cost could be a critical move, “Climate challenges can only be met with cost-effective tech options that enable everyone to make a personal commitment to stave off its far reaching consequences”, SCMP reported.
Although H2Pro can produce about 100 grams of hydrogen a day, it still has a long way to go in order to surpass other projects’ using conventional electrolysers which can produce thousands of kilograms per day.
But the company is aiming to make green hydrogen for USD 1 per kilogram by 2025, which is far cheaper than its current cost (USD 2.50–6.80 per kilogram), according to BloombergNEF.
The Hydrogen Council’s latest projection does not expect this scale of price drop until 2050. Meanwhile, the European Commission views hydrogen as a key priority to meet the 2050 climate neutrality goal of the European Green Deal. It reckons that renewable hydrogen technologies would be deployed at a large scale from 2030 onwards and reduce greenhouse gas emissions by 50–55% by 2030.
If the company can deliver a large-scale green hydrogen production system by 2025, it would become a pioneer in decarbonising the modern world.