Berkeley Haas - Dean's Speaker Series | Kathryn Hall, Founder & Co-Chair, Hall Capital Partners

(audience chattering indistinctly)

  • Great.

Good afternoon and welcome today’s Dean’s Speaker Series.

I’m Jillian Grennan.

I teach the SIF class here at Haas.

And it’s great pleasure today

to be able to introduce today’s guest speaker, Katie Hall.

Katie is the founder and co-chair of Hall Capital Partners.

Founded in 1994, HCP manages over 40 billion in investments

for foundations, endowments,

and large pools of family capital.

It’s one of the largest woman-led

investment companies in the world.

She’s also the co-founder and co-executive chair

of Galvanize Climate Solutions.

Galvanize’s unique investment strategy

is helping to accelerate

and scale the adoption of clean technology

and increase the rate of decarbonization.

I know we’re all looking forward

to hearing more about that today.

And Katie’s work places her

at the forefront of financial leaders who really understand

that the pursuit of financial returns

is in fact compatible with consideration

of environmental and social outcomes.

Here at Haas, we are keenly aware of this important link.

In 2008, Haas launched the nation’s first student-led

Socially Responsible Investment Fund,

and today our Sustainable and Impact Finance initiative

is educating the next generation of leaders

and leveraging finance and investment

to drive positive change in the world.

Each year over 150 MBA students

take classes in impact and ESG investing.

In today’s conversation,

we’ll be discussing how investment is being leveraged

to create these important social changes

and what we should expect to see in the near future.

As leading today’s conversation will be Ann Harrison,

the 15th dean of the Haas School of Business.

A renowned economist, Dean Harrison has dedicated her career

to creating an inclusive and sustainable policies,

both through her studies of development economics,

international trade and global labor markets.

She now brings this focused higher education,

here what we can call the greatest public university

and the greatest public business school, in the world.

We are so proud to be celebrating

a special lineup of speakers on sustainability

as part of this semester’s Dean’s Speaker Series.

So with that, please join me in giving a warm welcome

for Ann Harrison and Katie Hall.

(all applaud)

  • So, Katie, I just wanna start out

by saying we’re just so thrilled that you’re here today.

This is really exciting for all of us.

Our students, many of those in the room,

many of those who are watching

from their computers somewhere,

and our alumni as well who might be watching

outside of this room are really, really interested

in impact investing, venture capital,

early stage entrepreneurship.

So maybe we could just start out with,

maybe you could just tell us some major trends

and exciting new investment opportunities

that you are seeing at Hall Capital,

particularly coming out of the pandemic

and in this age of transformation and social impact.

  • It’s been quite volatile

out there in the world of investing over this past year.

So in some sense, it is a really interesting time

to think about trends

because we’re at such a point of transition

across so many dimensions.

I mean, the volatility that has cascaded

through the public markets into the private markets and is,

you know, recalibrating how generations of people

are having to think about investments and their prospects,

particularly as you factor in

concern about a looming recession

and what that might or might not generate

in terms of as both opportunities and risks.

We’re against that sort of chaotic backdrop.

We continue to see some really interesting things

from managers really across the board in asset classes.

Certainly in kind of venture capital and early stage,

there remains high-level activity

in things around climate, climate investing,

there’s really interesting things

probably in the public/private

world of biotech and the intersection of technology

and sort of more traditional biotech investing.

Again, that’s just been a wild mess of companies

that went public too soon

and are still incredibly interesting

and so now there’s real interesting things to do there.

And just more broadly in terms of different industries,

different companies that are part of

kind of transforming systems.

I mean, we are really at the point

of entire systems of our infrastructure

undergoing radical changes and need to go radical changes.

And those are the opportunities

and companies that are part of that

are where we think there’s interesting things to do.

  • So let me just follow-up on that a little bit.

So we think of the venture capital industry

as really primarily fueling

the development of the tech industry, right?

But beyond tech, what’s the role for venture capital

in other sectors, in the energy sector,

in the social impact sector,

even in the, for example, food sector?

Do you see a unique role for venture capital play

in these other areas?

  • You know, I think that we see a really important

recognition of the opportunity of these transition sectors.

I mean, we’re seeing this in terms of,

particularly around a number of things in ag tech,

again, everything’s tech, right, climate tech, ag tech,

but as systems are needed to change,

we’re seeing a lot of activity.

And it’s not just in devices or kind of hard technology,

but it’s other parts of

really interesting software solutions

and software tools that are being built

to measure or increase efficiency.

So across all of those different dimensions

there is a lot of activity

and it’s moved beyond just sort of the, you know,

only kind of, you know, SaaS

or only sort of, you know, something sort of

for consumer products.

  • Huh, interesting.

So let’s turn a little bit to Hall Capital.

So Hall Capital has this framework

which you call Full Consequence Investing,

and I’m wondering if you can explain to me and our audience

what do you mean by Full Consequence Investing,

how do you use it at Hall Capital to make decisions?

And I’m sure our audience is wondering,

do you use it for your whole portfolio

or do you use it only for certain kinds of funds?

  • Sure. So just to give a little bit more context.

So Hall Capital is a firm that works,

as we said in the introduction,

with families, foundations, endowments,

and we’re building typically

global multi-asset class portfolios.

So Hall Capital’s rule is to evaluate

and identify investment managers

that we will then hire to fill out

part of an overall portfolio.

So in Hall Capital land,

we look at a whole range of different investment managers.

And the Full Consequence Investing came about,

I actually coined that phrase and then something,

we trademark it, in, like, 2013

and it really came about because I was so frustrated

by how everybody was using terms in different ways.

So people were talking about impact investing

or SRI investing or ESG investing

and everybody got something different by it

and, you know, had different embedded return expectations

and different…

So we thought that for us,

kind of ESG investing, us Hall Capital,

ESG investing really was about deep fundamental investing

rooted in a belief that if you are using your human capital,

your human resources, your physical resources,

and your financial resources in the most sustainable way

and actually looking at those in a really holistic way

and considering the consequences

of all the different parts of your business strategy

that you would make, you the company,

would make better decisions,

you would be a stronger company,

and ultimately a more profitable company.

So our formulation of ESG is trying to get at this idea

that we think that incorporating those

is actually an additive factor

to companies’ kind of trajectories,

and ultimately investment managers

who emphasize that will be making better choices.

So today, across all the different asset classes,

we basically map out our investment managers.

Well, let’s stipulate,

we only invest with people that are of integrity,

that are doing good work, you know.

So we’d lop off one end of the tail,

maybe a pretty fat tail, I might add.

But we lop off.

And so our managers,

we would consider sort of traditional investment managers

that are fundamental factors

in looking at all of those that are integrated,

that’s sort of our halfway there.

And then people that have ESG factors is really a central,

deeply embedded part of their strategy.

And when we are building FCI-only portfolios,

we are only using those managers who,

the issue factor analysis is central to their policy.

And we actually, you know,

this is something that was relatively straightforward

in equities, increasingly doable and not that problematic

in kinda venture and private equity,

and we’re looking to build diversified portfolios,

quite doable in fixed income

although you have to accept the fact that, you know,

you have to have an opinion about the government

as being a good actor, right?

People have different views on that,

but let’s stipulate that in ours.

But it’s been hard in hedge fund land.

And that has a lot to do

with the fact that it’s shorter duration investments.

And most good fundamental investing,

regardless of asset class,

does need some duration to pay off.

But we’ve worked with different managers

and that is a place where it’s become

a bit more of a filter-based

incorporation of ESG factors to meet it.

So, I mean, it’s an area that we’ve seen

growing interest from different,

particularly with families and foundations both

are very, very interested in building

sort of global multi-asset class, FCI portfolios

that really have the, it’s not,

you don’t have to have an expected discount of your return,

and that’s a straight up return

just like all the other portfolios.

  • Thank you.

So I’m just so in awe of everything that you do

and the fact that you’ve got

$41 billion in assets under management,

you’re one of the largest

women-led investment companies in the world,

but at the same time you work

in a very male-dominated industry.

So I have seen that despite the fact

that it is a very male-dominated industry,

at least 50% of your senior managers are women.

Congratulations on that. - [Katie] Thank you.

  • So I’m curious.

What were some of the biggest challenges

that you face as a woman in setting up your fund?

  • You know, we were talking a little bit earlier

about sort of winding paths and how things work out,

and I would say that I experienced those biases

in different ways.

My first job out of business school,

I went to one down in the Peninsula,

was at a big investment bank.

And, you know, it was still just ridiculously old school.

And there was very clear cases of,

particularly around compensation,

bonus compensation that, you know,

the guy before me was treated differently than us.

I made a choice really early in my career

to sort of kind of opt out of that, right?

I only worked for two years

at a big firm after business school

and then I went and joined my friend Tom Steyer,

who I have come back around,

in what was then a very small hedge fund,

became a big hedge fund.

So I went to work in Peni,

and I left then three years later to start my own.

So I’ve had the luxury of being able

to create my own cultures, my own environments,

and build things the way that I think they should be

and, you know, that has really paid off.

I think that it is also something that,

as we have built Galvanize,

which we, Tom and I just started a year plus ago,

we’ve been very intentional about having,

that that company too is 50/50, men and women,

and with interesting diversity across multiple dimensions,

and we think we’re stronger and more attractive for it.

But it was because I actually said, you know,

I definitely wasn’t gonna stay in the system,

I was gonna just build outside the system.

  • So let me follow-up on that question.

So we have these incredible students here at Berkeley Haas,

who, many of them, are very interested

in finance and venture capital,

but many of them who also wanna build a more equitable,

sustainable and inclusive world,

what would your advice to them be

in proceeding along this path that you have pioneered?

How do you do both of those things?

  • There’s so many different steps.

I think that at a personal level it has very much to do

with how you choose to spend your time

and the type of firms that you work for

and the influences that you could have

in terms of changing or modifying cultures.

And a big part of that, I think,

comes from being as brutally aware as you can be

of your own biases, we all have our biases and limitations,

and have things built into the systems

that sort of counterbalance that.

I think it also is a view of,

you know, cumulative experience, right?

It might make sense to gain one set of experiences

at a particular firm for a period of time

to give you the platform and the capacity and the power,

I use that word intentionally, to do something on your own

and be in a more of a directive model.

  • [Ann] So like what you did. - So what I did.

  • You started in a more traditional area

and then you moved.

So it’s not so much where you start, but…

  • I very much think that.

I think that as you’re evaluating jobs, you know,

pay a lot of attention to sort of the culture

and the things because you want,

if you’re going to go that route,

you wanna be able to accomplish

and gain the learnings that you want that then are useful

when you’re in a position to do more.

But I also think that there is a lot of things

that are happening and I do,

you know, coming back to some of the early points,

I think that, again, this is a little bit

I wear my Galvanize hat,

but when there’s huge transitions and huge change

in areas that are mission-aligned

that are around climate or around solving societal problems,

there’s just really interesting opportunity,

and those firms exist.

And so you can also, you know, increasingly push

to find those firms that are thinking that way.

  • So you’ve mentioned Galvanize Climate Solutions

several times, so maybe we can just talk about that.

  • Sure. - So this is a new venture,

a new investment platform that you founded with Tom Steyer,

and we would love to hear more about it.

So tell us what kind of investments are you making.

And here’s a question, maybe you could talk

after you talk about that a little bit,

and this is a question that we always ask in this area,

how are you going to measure impact?

  • So yeah, it’s a huge issue.

We could probably spend the entire afternoon

just on that topic alone of impact measurement.

But let me start with a little bit of an intro to Galvanize.

So Tom and I actually go,

Tom Steyer and I go way back.

We met at our very first jobs as analysts

at Morgan Stanley in New York,

where we both were working there,

went to that other business school,

and then went back to New York,

and then, as I’d said, I joined him as his partner in 1986,

a long time ago.

And so we have been each other’s sort of sounding boards,

advisors, confidantes for a long time.

And when Tom left Farallon in 2012,

some of you may have encountered him,

he really was one of the leading climate leaders, advocates.

He was more than a gadfly, you know.

Very much, you know, strong voices.

And then sort of in the early part of 2021,

Tom was thinking a lot about what he wanted to do.

He had his foray into presidential politics,

like what he wanted to do with his capital and his time

kind of for the next chapter

since he had no interest in retiring,

I had no interest in retiring,

although I was stepping back to sort of just a part-time

position at Hall Capital.

And we really kept coming around to the view

that the existential crisis of our time is climate.

This is an area that we know needs trillions of dollars

of capital marshaled.

And we thought that we could do what each of us had done

in our respective careers,

which is, you know, build investment platform

to marshal that, at least some of that capital

to, you know, accelerate, to provide,

to develop solutions to the climate crisis.

And, you know, it really help move the transition

to a net zero global economy along more rapidly.

And we thought we could do it

in a different kind of investment firm

that didn’t have to be like all of these other firms

that looked a certain way.

And we really thought that it had to be

a big significant platform.

We needed to take a leadership position in it

and that we needed to be able to invest

in a way that generated compelling returns

for our investors, that it wasn’t concessionary,

but that it would be one of the leading investment firms

as well as a deeply mission-driven organization.

And we plan on having

a number of different investment strategies over time.

We started with investment strategy

really focused on kind of early stage VC and growth capital,

but we have a team

that is going to be a public activist strategy.

Actually just today we announced a person

that is joining to build real estate strategy,

so it’s across a whole range of strategies

that we’re going to have.

And it’s been just a crazy rocket ship of the past 13 months

since we’ve started.

Just like, you know, we’re a startup,

which is all about strategy, capital rating, and people.

And it’s been really an exciting time to get all the people.

We have been investing in the innovation and expansion,

which is sort of this VC

and growth capital sets of companies.

We’ve made some initial investments already.

And the whole area of measurement and impact

is a critical one.

I mean, it’s the core, right, of what our mission is,

is to have impact.

And so how we measure that is sort of multi-layers,

and it’s going to vary to a certain extent,

strategy by strategy, with some common themes.

So what we are doing in the innovation expansion arena

is it, again, sort of steps

and at kind of the risk of being a little bit granular,

I think it’s worth kind of getting into.

So we start with kind of the whole pipeline of companies

that we’re looking at and investment opportunities,

and we are assessing them,

we’re putting ’em in the kinda three buckets.

We’re putting them in a bucket of companies

or strategies that can help to rebuild parts of the system,

if we rebuild and replace things that serve old systems,

then by replacing something

we could have a significant reduction

in greenhouse gas emissions,

and/or there’s what we call restore

which also includes, you know, sequestration strategies

as well as other adaptation strategies.

So from the beginning

we’re looking at investment opportunities and saying,

“Does this idea, does this company,

does this technology have the capacity?

Is it,” if you will, “the TAM,”

is the total addressable market on this case,

we’re kind of creating a total addressable climate impact,

“Is it big enough?

Is it big enough that we have, you know,

be kind of in the zip code of something like 500,”

if it was adopted universally, you know,

“500 mega tons of emission reduction annually?”

We’re trying to scale things

so that we’re investing in things that have impact.

Like, we start from beginning,

we don’t do it as an afterthought, right?

Like, a lot of investment firms

go through their whole investment thing and then say,

“This is a great investment.

Can we build some climate adjacencies,”

and that’s not what we’re doing.

We’re really interested in addressing that,

thinking about that up front.

Then we go through kind of our whole range

of regular due diligence, we make an investment,

we’re asking our companies and ourselves to respond to the,

we were laughing earlier

about one of the things about business in general,

but climate tech in particular

is it is filled with acronyms.

And I’m like, “Okay, oh, which one am I talking about now?”

But we’re using the ESG metrics that came out

of something called the ESG Data Convergence Initiative,

which was developed by a consortium

or association of Institutional Limited Partners

and General Partners,

and it asks a series of questions about emissions,

about renewable energy use,

as well as a number of DEI and governance factors,

you know, trying to get some standardization.

And then we are looking very closely

at company-specific things,

like related to a particular company

is going to aim to reduce the usage of water in agriculture.

I mean, that is something that we can specifically measure.

Number of acres covered, number of uses, you know,

so there are company-specific KPIs.

But that’s a really long way of saying, “It’s complicated.

It is case by case.

It’s gonna vary strategy by strategy.”

Again, we were having this conversation earlier.

It is a real problem.

I actually think it’s actually a real challenge

for kind of industry and investors

to find the appropriate balance

between kind of quantitative measures

as well as more, you know,

specific indicators to reflect impact.

And the shorthand kind of just snapshot

either misses too much or oversimplifies.

But the other answer, the long one that I just gave,

is also not completely satisfying.

‘Cause it’s like, “Come on,” right, “that’s so much work.

How do you really know you’re doing anything,” so.

  • I mean, I think this

is incredibly exciting- - It’s a really exciting area.

  • What you’re doing.

I mean, you are at the forefront of change,

of how do we evaluate all these opportunities

and do it in a way which is successful

both from a business sense,

but also makes an enormous difference.

I mean, I cannot imagine doing anything

more important than what you’re doing.

One quick question is,

do you have certain sectoral priorities?

So one of the challenges is that

there’s some areas which are just dirty areas, you know,

making cement is dirty,

but there are new changes that are coming forward.

So you can make low carbon cement,

you can make low carbon steel.

It’s hard right now in this period

to imagine a world without using cement or steel.

So are you moving in those areas too

or are you staying out of them?

  • Oh no, this is a statement across the board at Galvanize,

we are working across sort of all sectors

because we really think

that we need to be part of the transition.

And it’s funny you talk about cement.

One of the investments that we made is actually in a company

that is a sensor company that can help,

that is help to make more precise

and improved mixes of both concrete and cement,

which can significantly reduce the clinker component,

which can, you know, substantially reduce the emission.

So we think we’ll continue to see a lot of things

across the board.

I mean, if you look out there in sort of the venture side,

the places that have just scooped up

a hugely disproportionate amount of the dollars

have been in mobility, I think EV and storage,

I think batteries, right?

I mean, that’s just, like, really disproportionate amount.

But we are seeing very interesting things in ag and food.

We’re seeing much harder problems,

but maybe really interesting things

in kind of industrial transformations.

We looked at a really interesting company,

didn’t end up doing it then, for some capital reasons

in plastic circularity.

So it’s across the board.

  • Wow, that’s so interesting.

So I do wanna leave us a little bit of time

for questions from the floor.

So I only have a couple more questions,

but I wanna shift a little bit

and think about the role of business

versus the role of the public sector.

So how important, do you think,

the role of private companies,

especially financial institutions will be

in getting to net zero?

I mean, do you think that this whole transition

is really being led by the private sector

and by investment companies in moving towards net zero?

  • I definitely think,

I mean, we live in a policy world in all these dimensions,

but I think what we have seen

is policy is developing so differently in different regions,

whether it be the EU or certainly here or the UK

or China or India.

And what we have seen simultaneously with that

is a really strong movement from,

particularly European pension funds

and certain demanding change, some US,

and corporations are moving kind of across the board,

I mean, disproportionately

not just the financial institutions,

it’s really regular companies who were being demanded

by their customers who were anticipating regulation,

who were depending by kind of their investors

to make change.

I mean, the last number I saw,

something like over 1,500 companies

have made some version of net zero pledges.

Now, probably only a small subset of them actually

know how to get from A to B.

But the power of that momentum is real,

I think going to continue to be quite influential.

Now, you then pair that with the public sector, right?

You have the regulations in the EU that are coming,

that are going to accelerate disclosures,

regardless of what the SEC does at a company level,

you have the IRA, terrible name, I mean seriously,

the IRA, which is actually one of the first significant,

I mean, movement in terms of, you know,

setting up positive incentives

as well as negative incentives

around some of these transitions.

So it will be a combination.

  • [Ann] I see.

  • And I think that what we’re seeing

from the financial institutions.

We’re not leading.

There’s an attempt at leading, again, from some of them

and then they got some pushback

and they start scurrying back.

So I don’t think that we have as much leadership

from the larger financial institutions.

  • [Ann] I think I know which financial institutions-

  • I think we should- - You might be referring to.

  • I think we should have more leadership. (chuckles)

  • Okay, okay.

So you’re suggesting it’s a partnership with some…

So let me ask you about one effort

that’s going on right now, as we speak.

The Securities and Exchange Commission, the SEC,

which, as you all know, regulates financial markets,

is proposing some regulatory structures,

in particular, they have released a proposal,

which has not yet been confirmed,

to mandate climate risk disclosures by public companies.

I know they’re also suggesting

release disclosing ESG strategies.

What do you think about these proposals from the SEC?

Do you think they’re a good idea?

  • We actually are at a minority,

I’m putting my Galvanize hat on,

but we are at a minority

of a lot of the financial institutions and investment firms,

we are strong supporters of the disclosure across the board.

We think that it’s imperfect.

We know how difficult it is.

But we think that until we get to much greater transparency

and people acknowledging what these risks are,

even with imperfections,

then it would be very difficult to make progress.

It would be harder to make progress, let me say that.

And, again, we’re seeing it in the EU.

They are kind of requiring many of these disclosures

in different ways.

I think one of the things that is interesting is,

and we see it play out in the public press too,

is there are such mixed signals coming

about what to do with the information.

I mean, yeah, I just saw something

that the FDIC is continuing down their path

of particularly encouraging banks

to look at sort of the climate risks and sort of loans,

particularly the smaller banks,

and they’re doing this scenario work with the big banks,

but it’s like, okay, so like what does that mean

in a world where you can’t get fire insurance

or you can’t get, so there’s a bit of a question

as to what end on some of it.

  • Huh, yeah, interesting.

So I won’t ask you why you’re in the minority of supporters,

but maybe what I will ask you is

what do you think needs to be done about greenwashing?

  • You know, it is a real thing.

I do think that greenwashing is, to a certain extent,

solved by disclosures

and a better version of impact reporting,

of impact measurement.

I mean, again, both Hall Capital and Galvanize

are registered investment advisors

and, you know, we have to live kind of across the board

by what we say; in theory, we have to be able to backup.

And I think that I don’t have any trouble

with a more pointed requirement to be precise.

  • So you see these SEC proposals

as a way to address the problems of greenwashing?

  • I think it helps. I think it helps.

Again, you know, today most,

and this gets back to sort of these different coalitions

about impact reporting, impact measurement,

most impact reports are used for marketing

or for kind of a compliance thing

with a certain subset of investors.

They aren’t used broadly to delineate or amplify strategy.

And I do think that if you actually

could get to a better version of people reporting on impact,

it would go a long way towards addressing this greenwashing.

  • Interesting.

So this is actually my last question.

So if you have a question after I finish this question,

you can go to the back of the room

and ask your question at the mic,

and please identify yourself first.

But let me just ask my very last question,

which is, you know, we have a community

which is really incredibly excited

about the opportunities for investment

in these areas going forward.

So let me ask you, I don’t know if you hired MBAs,

but if you do hire new MBAs, what would you look for

and what are some of the really

exciting opportunities out there for new MBAs?

  • A, we do hire MBAs at both firms that I’m involved in.

So check the websites for job openings.

And I just think that,

kind of at any point in people’s careers,

the place where there is the most interesting opportunity

is where there’s the most chaos and there’s the most change.

‘Cause that’s where you can actually jump in

and do something.

You can actually have a differentiated point of view.

The company that you’re working for

can have different point of view.

And so kind of having the confidence

to kind of wade into those messy, chaotic places,

definitely climb is one of them, you know,

ventures one of them,

but a lot of different investment sectors

are being all upended right now.

You see it in the public markets.

Oh my goodness, you see it in the real estate markets.

I mean, things that are chaotic, I think,

I personally find that energizing,

but I actually think it is also really,

it doesn’t feel like the safe place to look for opportunity,

but it’s definitely an exciting place

to look for opportunities.

  • Thank you for that.

That’s a great note on which to end.

So let me open the floor for questions.

  • Just gonna do it like this.

Hi, Kathryn, nice to meet you.

I’m Natalia.

I am doing a master’s in Climate Change here at Berkeley.

  • [Katie] Oh, great. - And I spent the last summer

at an impact venture capital fund

focusing foreign agriculture,

so most of the things that you were saying

definitely resonate with me.

One of the things that I wanted to ask you

is there has been recent debate

on how should ESG be approached

and whether E is more salient than S and G,

and I was wondering how you approach it in Hall Capital.

Thank you.

  • So it is, as we’ve seen out in the press,

you know, the whole issue about ESG and what it means,

is really complicated and more politically frothed

than it has been for quite some time.

And part of that is because the S and G factors

are just harder to measure, right?

It means so many different things to different people.

So I feel like sort of the focus on the E is,

I don’t mean that as a retreat

‘cause obviously it’s central

in everything we’re doing at Galvanize,

but it’s just easier to dimensionalize.

And so I think people are kind of using that

and falling back, not because it’s more salient,

but because it’s actually easier to measure,

which gets back to kind of a part of the big problem

across the board.

We at Hall Capital don’t think

that that is kind of the answer.

We actually are still forging ahead.

We are big believers in ESG, again FCI,

and our kind of stylized world

because we actually do think it’s the best use of resources

across all those dimensions,

human capital, physical capital, financial capital,

that manifests itself through, you know,

S or G, if you will, for the others.

That is really a source of strength.

  • [Natalia] Awesome, thank you so much.

  • Hey there, nice to see you.

  • Good to see you as well, Katie.

My name’s Austin.

I actually used to work at Hall Capital before coming here.

I’m a first year MBA student.

My question is for those of us who are involved

in organizations where we’re struggling

with gender diversity, for instance, the investment club

we have exactly one senior female lead,

how would you recommend that we try to increase

gender diversity, especially given that we’re made up

of a large male group?

  • As you point out, it actually creates a problem, right,

because that is self-perpetuating

in how you get into the group.

You know, in other situations

and when we were thinking about our own kind of recruiting,

either at Hall Capital or at Galvanize,

we spend a lot of time

trying to think about what might be systematic,

structural things that are presenting an image

or something that conveys an attitude

even it isn’t one that is.

I don’t know if it’s about time that’s meet

or requirements to join or not, you know, something,

I think kind of a pretty rigorous self-examination

of if there are some of those things that are present

and then essentially combating against that, you know,

if you identify what might be some of those hurdles.

And it’s probably worth asking some people, you know.

Why not?

You should be interested in it.

You’re in the same finance track, you know,

what is it about it that isn’t resonating?

  • [Austin] Awesome, thanks so much, Katie.

  • Hi, Katie. My name’s Monique.

Thank you so much for being here today.

This has been tremendously insightful.

So I’m a fourth year at Haas right now

and I’m interested in getting into finance myself.

And so I’m curious,

you were discussing at the beginning

the difficulties of investing among different asset classes

and how both your firms you guys are working on everyone.

So I’m curious which one thus far has been the most fruitful

and which one you’re most excited about for the future.

  • In terms of investment opportunities or investment areas?

  • [Monique] Yeah. - They’re different things.

I mean, in Hall Capital we’re investing

across all asset classes.

And probably the most activity and sort of new things,

interesting things coming out in the venture

and growth capital world over the past couple years

that we might be at a time of rotation around that

as just things are being so dramatically repriced,

things that had been not very interesting

in the public markets are returning to a point

of real, real interest.

  • [Monique] Got it. Thank you so much.

  • Hi, Katie.

My name is Emily McCabe

and I’m a fourth year at Berkeley as well.

So you mentioned that we’re in a transition period

and I think a part of that

is that we’re seeing historic climate policy

at a federal, state, and local level.

So I have an example.

I’ve learned in my studies that there’s an opportunity

to reduce emissions in the built environment

because we burn fossil fuels in buildings.

So this is an opportunity for companies

that manufacture electric appliances

to, you know, get off the ground.

So I’m curious, as you evaluate companies

beyond financial returns at Hall Capital Partners,

is policy analysis a part of that and should it be?

  • You know, our job at Hall Capital

is to devise asset allocation plans for our clients

and then implement that by identifying

and hiring the best investment manager

to fill out that part of a portfolio.

So when we’re a valued investment managers,

we spend a lot of time trying to understand

how they are incorporating policy aspects

and policy changes, but also macro

or other geopolitical things

into their own investment practice.

So that’s really where that intersects

in Hall Capital’s world.

Although, again, we need to be aware

both in climate policy as well as other important factors,

what’s created big headwinds or tailwinds

to just opportunity sets.

At Galvanize, we are deeply involved

in thinking about policy and analyzing that

both as it presents headwinds, tailwinds,

but also with how some of their portfolio companies

can take advantage of it

or how that creates new markets for them.

Again, if we’re looking at something

that is going to be measuring carbon footprints

for apparel manufacturers, you know,

there’s different regulatory regimes

that that has different degree of relevance.

So they’re much more closely intertwined

when we’re at the actual investing in companies,

and I think you need to be.

  • Great. Thank you so much. - Sure.

  • Hello? Hello, Katie.

My name is Matthew Pattom.

I am part of the weekend MBA program here at Haas.

So we have heard about climate tech, ag tech, food,

my question is surrounding waste.

So do you see, from where you are,

how important or relevant is it in investing companies

that deal with the big waste problem

that you’re going to be seeing in the near future?

What is your take on it? What is your visibility?

  • You know, it’s a big issue.

It’s actually a big environmental justice issue

because of disproportionate impacts on communities.

From an investing area,

there is more that is being done there

in public private partnerships

or through public support or policy

than we’re seeing in terms of company transformation.

We have seen some things,

but from kind of getting back to return expectations

and the ability to capture returns,

our model at Galvanize is specifically looking for,

you know, compelling market rate returns.

Most of the stuff, not all,

but much of the stuff we’ve seen

in kind of the waste systems

is still running through public partnerships.

So it hasn’t been as robust in an opportunity set so far,

but we’re looking at different things.

I mean, I mentioned we looked at this big

plastics recycling business and the technology around that,

which was really interesting.

In the end, the problem was hugely capital intensive

about building facilities, really different facilities.

And since most of that runs through

kind of long-tailed government,

local, municipal contracts, kinda just (mumbles).

So it’s an important area,

but it hasn’t one that has been a really

big investment opportunity set for us yet.

  • So you haven’t identified any potential technologies

that can make a difference.

  • Well, we haven’t right now,

but, again, they’re looking at,

there’s so many different things.

I mean, you’ve seen some of these like enzyme,

plastic enzyme degradation or recycling things, you know,

there’s a lot of work being done.

But since, at Galvanize, we’re looking to invest

in particular types of companies

that are actually really past the technology risk largely

and into scale up risk.

We have not seen them in that sector yet.

  • [Matthew] Thank you.

  • But yeah, it’s a big world and there’s a lot going on,

so hopefully we will.

  • Hi. Thank you, Katie.

My name is Kaiza.

I’m an MBA student here.

So California, thankfully, is very progressive in this,

but there are many states

which are not as progressive as us.

So I was wondering, you know, what’s Hall’s policy

and what’s Hall’s initiative right now

to work with those states which are less progressive

to move this forward?

Thank you. - You know, at Hall Capital

we are investing with investment managers

really around the world.

And I would say that their kind of investment disciplines

tend not to kind of run through

that progressive-conservative way.

It becomes much more about a view

of the sets of companies that you’re going to invest in.

I would say that in our FCI world, right,

that is a subset that does skew,

that happens to align more

with progressive investment managers

that are sometimes located in progressive places,

but not necessarily.

So it runs more through their philosophies

than sort of the locations.

And in Galvanize world, it’s a big issue, right,

because it’s really about what the companies are doing.

And there it’s really the companies

and what their cost benefit is,

I mean, as a company, we invest in that

optimizes roots of public transportation.

It’s a software solution,

and that’s actually a problem solver for progressive,

I mean, progressive or conservative,

if we’re gonna make up a continuum,

those municipalities are just interested

in solving their problem at a good price

as opposed to something that’s deemed climate or not.

  • [Kaiza] Thank you.

  • Hi, Katie.

Thank you for coming to speak with us today.

My name is Ryan Tan. I’m a second year MBA student.

I’m also the president of the Haas Investment Club.

Austin has been- - [Katie] Oh, great.

  • A delight to have with us.

So one of the questions we have

is we have a lot of first years

who are interested in public market investing,

specifically they are interested

in having impactful public market investing,

whether in equities or in credit.

However, the one issue that we’ve had

is when students go into,

like, your large asset management firms,

think of like a T. Rowe, a Franklin, a Capital Group,

ESG or impactful investing

is almost like a compliance checklist,

and so what advice do you have for first years

who are interested in public market investing

but would like their work to actually be impactful

instead of, as you mentioned, you know,

you go through the investment ideas

and then at the end you wanna make sure

that the CEO’s not having an affair

with one of his, you know, co-workers?

(audience chuckles)

  • Sadly, your last comment doesn’t necessarily align

with all the other things we were talking about.

So there’s bad behaviors even

in really well-intentioned firms.

That’s sort of a set of human dimensions so I would,

that’s much more about a culture

with regard to the actual practice of investing.

Again, there are a growing number of firms

who do have it as central or at least integrated

in my own kind of stylized vocabulary.

I think search out those firms.

I think the other answer

is actually think about what impact really means.

I think a mistake that people make

is translating impact into short-term causality.

And actually I don’t think that’s the right way

to think about impact.

I think about, you know, impact in the investing sense

is to think about companies,

the companies in which you’re investing

or the asset you’re investing and what path they’re on.

I mean, there are some really interesting work being done

by some pipeline companies

who are dramatically trying to shift

kind of the source of kind of their energy,

their transmission.

That’s interesting, right?

You could have high impact by investing in companies

that are trying to really accelerate a transition.

So I would encourage people to think

and push themselves as to what impact really means.

‘Cause I think that it actually can, you know,

means aligning with and rewarding, if you will,

by investing in companies that are making positive change

and not with those that aren’t.

Not just because of that filter,

but because I actually really think

that that is a huge marker

as to prospective, you know, risk or opportunity.

  • [Ryan] Thank you.

  • Hi, thank you for your talk.

My name is Shivangi. I’m an MBA ‘23.

My question for you is around the combination

of multi-stage investments.

So I’ve worked on projects before, for example,

like small modular reactors or electric batteries,

and what we are seeing is there’s a trend of,

I guess, deep tech that needs to be commercialized

with the help of both investing in the deep tech itself

but also the infrastructure that surrounds it.

Typically, what we’ve tried to do

to accelerate the transition

is you try to break down the risk

to see, like, who can invest in what’s known,

what’s the public infrastructure.

So, for example, with a small modular reactor,

that would be everything around the building itself

and then find another investor to kind of do,

you know, the deep tech investment.

In your specific case, you can invest in both.

Would you use that in commercializing

one particular technology all the way through?

Or do you see that more as a risk

where you feel like actually

there should be more than one investor?

  • Oh, you know, we at Galvanize, in the first strategies,

are really focused on investing in companies

that have largely satisfied the tech risk.

And so it becomes a product market fit,

you know, addressable market scale up sets of risks,

and a lot of the deep tech is still science experiments.

And there’s great investors that are doing that.

I mean, obviously Break Through

is leading a lot of that work, and that’s good.

But that’s sets of investments

that probably won’t have payoff for 7, 10 years.

And we are really interested in companies

helping to scale companies that can have payoffs,

i.e. impact, changing the systems in this decade.

Now one of the things that we are doing, though,

is that we recognize there’s been,

we think an excess stratification,

which is why we’ve actually paired our early stage

and growth investing in one strategy

as opposed to segmenting it

because there has been too much of that.

And we’ve seen a lot of money being raised

that’s quasi, you know, that’s the de-risk money,

which, again, we can debate about the pricing of that

and people’s incentives.

And I think we need to have all of these different things.

We need to have longer duration, you know,

higher risk hard tech,

we need to have de-risk quasi bank capital,

we need the kind of things in between.

  • [Shivangi] Thank you.

  • Oh. - Thank you so much.

I think we’re out of time.

We’ve taken up a lot of your time.

We are so grateful for all these insights

and for you visiting us here at Berkeley Haas.

Thank you so much.

  • Sure. Thank you. (Ann and audience applaud)

Thank you very much.

Happy to be part of it.

  • [Ann] That was so great. - [Katie] Oh good, good.

  • [Ann] I hope you’re okay with it being on YouTube.

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