(audience chattering indistinctly)
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.
- 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
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)
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.
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 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.
- 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.
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.
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.
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?
- 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,
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.