How Xin Ma’s TCN Ventures Capitalizes on Asia’s Climate Tech Opportunities

How Xin Ma’s TCN Ventures Capitalizes on Asia’s Climate Tech Opportunities

May 13, 2024

Interviewed by Nicolas Sauvage on May 14, 2021

Total Carbon Neutrality Ventures often invests through funds and as limited partners to gain insights and quickly put boots on the ground in countries and sectors it wants to explore. Fund Managing Director Xin Ma sat down with TDK Ventures’ Nicolas Sauvage to tell the Corporate Venturing Insider audience why it is critical to be clear on the fund’s objectives and how it can help mature the sector.

Fulfilling Her Energy Sector Destiny

Born in a coal-rich province in China, Xin Ma, was naturally drawn to the energy sector, which led her to invest in climate tech startups after a long and interesting journey. Her path to success began with her move from her hometown to Beijing, where she studied at the University of Science and Technology. She shifted her focus to the energy sector, earning her master’s degree from the University of Petroleum.

After graduating, Xin joined CNPC and PetroChina, one of the country’s top national oil companies. Her curiosity about the international aspects of the energy industry drove her to pursue a doctorate in energy economics from the University of Dundee in Scotland. After completing her Ph.D., she joined Deloitte, where the importance of energy was further underscored.

During her time at Deloitte, oil prices hovered around $100 per barrel, with predictions it could go as high as $250 per barrel. Curiosity about the commodity’s volatility prompted Xin to join TCN Ventures Energies in Paris.

“My first job was to analyze the energy mix — price, supply, demand, geopolitical factors, and where the energy sector was heading,” Xin explained. “From there, I entered the business and operational parts of the company and started to work on M&A and finance elements. That’s when solar. distributed energy and energy storage became very important. Tesla and China’s Nio came on the scene.”

A well-timed maternity leave provided Xin with time to contemplate her career path.

“I was…looking at all these new trends, and I started to observe there’s a division in TCN Ventures that is doing all sorts of investments like hydrogen, distributed WAN, and IoT,” she said. “I got in touch with the director. He said, ‘You have this transaction background, and you’re interested in energy. You are going to make and execute the cases.”

So, she joined TCN Ventures Energy Ventures — the previous incarnation of TCN Ventures Carbon Neutrality Ventures, just as energy tech was overtaking fintech as the darling of venture capital investing.

“Very quickly after I joined the team, mobility became a very important theme, as well,” Xin said. “This was especially true in electric mobility, as China, the US, and Norway continue to adopt electric vehicles. That first year, 75% of our portfolio was from the US and Europe, but I thought Asia is just as important for renewable energy, batteries, electric mobility, and climate.”

Focusing on Asia

Xin said Asia is a ripe territory for climate tech investment because “that’s where a massive amount of the CO2 (emissions) are created,” she said. “And our part of the world, from the regulator to the individual, has a big consciousness of the environment. And because of the stage of development our economy is in, we’re not going to still rise a lot in terms of CO2 and all that. Asian countries like India and China have a legitimate way to develop themselves with available resources which are less expensive.”

The problem and the market are bigger in these industrialized Asian nations, she said. The region also spawns strong local entrepreneurs who have gained overseas experience in battery swapping and other technologies at the core of TCN Ventures’ mission. The most important advantage Asia holds in leading the mobile electrification movement is a large population and industrial sector eager to test new solutions and enter offtake agreements, she said.

She noted that Asia, unlike Europe, hosts several ‘super apps’ like WeChat and Grab, platforms that integrate numerous services into a single application. This ecosystem approach provides additional avenues for the fund to invest and influence, unlike Europe, where solutions tend to be specialized and vertical.

“The stage of development means the digital solution in Asia — payment systems, e-commerce, mobility, without everybody owning a car — can leapfrog to shared and electric mobility,” she explained. “This makes the ecosystem fascinating and exciting. There is a big scope and genuine innovation in autonomous driving, AI, battery technology, etc.”

Xin differentiated India and China by their stages of development and the use cases they target.

She is intrigued by Chinese startups homing in on the delivery economy, particularly those developing battery swap solutions for two-wheel vehicles. Riders operating these businesses often come from low-income communities and rely heavily on their vehicles. They need efficient ways to keep them running.

“They ride 80 kilometers per day, and it’s such a hassle for them to stop and charge their batteries,” Xin said. “They need to swap quickly.”

In India, “although the two-wheelers are coming probably in five years’ time, electrification for mobility is really happening for three-wheelers,” Xin said.

Three-wheelers play a crucial role in last-mile connectivity on the subcontinent. Xin admires how Indian entrepreneurs can make companies profitable with smaller investments compared to China, where the government makes a lot of capital available to private sector enterprises supporting innovation.

Gaining a Foothold through Funds

Total Carbon Neutrality Ventures initiated its expanded presence in Asia by investing in funds rather than going the direct investment route.

“When we started the little venture we had in Asia, we didn’t have a venture team in place,” she explained. “We decided to go for the funds because things move very quickly. For us to really have coverage on the ground (it was preferable) to be aligned with professionals already in the ecosystem. We are pretty happy with what we have done because those partners not only see the sector we are investing in, but they also have a wider range of other sectors adjacent to what we are doing. Not only do they bring deals, but they also do a deep dive with us on the sector.”

TCN Ventures continues to partner with funds when it enters a new country or a new sector it is unfamiliar with or where significant resources or industry collaboration is needed to build and operate the technological ecosystem.

Xin acknowledges that investing in funds can be time-consuming and may require additional resources to follow through on deals. To address this, TCN Ventures leverages its internal team and virtual ecosystem. Including members from the innovation, business development, strategy teams, and the specific business unit to provide valuable insights on startups and solutions that the internal team can adopt helps define investment goals and leverage resources effectively to maximize the benefits of investing in funds.

On the other hand, Xin heads a team of professionals that has been investing since 2008, so if they are contemplating an investment that falls within their scope of expertise, she prefers to invest directly.