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2023 ESG White Paper

2023 ESG White Paper

Founding Partner’s Letter

Anna XU

Founding Partner of HIKE Capital

The Promethean fire is a metaphor for humanity’s continuous breakthroughs in energy and information revolutions. A new technological cycle has once again brought humans to a historical crossroads.

A century ago, the first commercial airplane emerged, and the automotive industry, was promoted by the Ford Model T Assembly Line. The innovation had become a crucial driver of global economic growth. The industrialization process of automobile popularity accelerated the development of energy industries like petroleum. These big racetracks led to and witnessed the rise of new production models and modern consumerism.

As the gears of time continue to turn, in the past year alone, we have witnessed history unfolding month after month: in November 2022, OpenAI’s ChatGPT opened the door to a new world; in December 2022, net energy gain was achieved for the first time in a solar fusion experiment; and in 2023, SpaceX completed two test flights of Starship, launched nearly 100 rockets, and China’s commercial space industry achieved several successful tests.

HIKE Capital, as a Founders Fund, welcomes the new world of great changes, while actively thinking about how to promote sustainable growth in the new era and how to integrate ESG into HIKE’s overall strategy. ESG investment is not just a slogan. It profoundly influences investment and entrepreneurial behaviour. Firmly focused on the dual strategy of zero-carbonization and intelligence, we shoulder the mission to find the very few entrepreneurs who will drive paradigm change and look forward to participating in their defined disruptive innovations. In the process of industrial evolution, HIKE is committed to being a responsible investment firm.

The companies we invested in continue to break through in technology and business while making significant progress in the ESG field. Li Auto, a new energy vehicle (“EV”) manufacturer, continues to lead the development of EVs in China and is expected to exceed one million in sales next year and enter the international market. Halara, a cross-border athleisure wear brand with a digital supply chain, advocates for a positive and healthy lifestyle, providing overseas users with higher-quality products. Guazi, a used car platform, has sold approximately 2.5 million used cars, promoting a green circulation economy. Yuanbao, a pioneer in AIGC applications, makes customized and inclusive insurance services accessible to more people. FlashEx, through digital innovation and human-centric management, enables millions of delivery persons to earn a more decent income. Megatronix, dedicated to “let there be no difficult-to-code software for vehicles”, brings a revolution to the automotive industry. Spark’s online education products cover over 100 countries, promoting educational equity. Several AI pharmaceutical companies are speeding up patients’ access to better treatments. Hopewell’s NLP technology is world-class and Xbiome enters phase II clinical trials successfully. At the same time, we actively participate in AIGC investment opportunities, hoping these companies will grow into world-class enterprises that improve society and human life.

In the past year, HIKE has actively improved its own ESG practices, refining the ESG organizational structure and investment processes. We evaluate the ESG risks and opportunities faced by target companies and conduct regular interviews, collect data, and provide timely assistance to invested companies. To achieve digitalization and low carbonization in internal operations, HIKE, in collaboration with professional service providers, developed the “Light Year System” for investment management. Furthermore, HIKE is committed to creating a low-carbon, green office environment and advancing workplace equality. We have conducted multiple training and sports activities to enhance the professional skills while enhancing the physical and mental health of the team. HIKE is also actively involved in philanthropy, participating in the “One Village, One Kindergarten” and “Light Blindness Project” to bring care to students in remote mountainous areas and visually impaired children, respectively.

Looking ahead, we face not only short-term fluctuations but also long-term irreversible changes. Entrepreneurs with outstanding talents, resilience, and strong leadership can lead their teams through challenges and grow into industry champions. HIKE hopes to invest in companies that dare to imagine and actively create the future. Facing the cycles, we maintain continuous reflection on practices guided by ESG principles.

First, new thinking and innovation

The transformation of the dual-carbon energy system, digital China, the construction of the national security strategy system, and rural revitalization will continue to bring opportunities. Thinking styles and cognitive abilities influence how we perceive these opportunities. The energy revolution is the biggest driver of technological innovation. Curiosity drives us to constantly find the next opportunity. A scientific cognitive framework, critical thinking, and methodological sedimentation help us understand the variables in the external environment, focus on self-renewal, and keep an eye on changes in the competitive arena.

Second, big cycles and survival skills

Economic cycles, technological cycles, and climate cycles are intertwined. As investment trustees, we respect cycles and industrial laws, believing that super founders can move through cycles. In today’s China, a large number of entrepreneurs who have survived fierce competition and embraced change have world-class competitiveness. China’s labour productivity will still rise in the new world order. Though we no longer have the traditional demographic dividend, we possess a creative labour force dividend. China’s talent advantage, engineering advantage, and high-end supply chain clusters will continue to shine in the important cycles of the world economy.

Third, sustainability and responsibility

In our eight years of entrepreneurship, HIKE deeply reveres for investment and wishes to build a century-old brand since Day 1. We continue to study the changing behaviours of users on the front line and strive to understand the uncertainty and long-term certainty in macro-economy and regulations. We keep self-reflection dynamically and avoid letting our advantages in version 1.0 become disadvantages in version 2.0. In the process of modernization and urbanization, people need to have a more quality, dignified, and equal life. The technology-driven innovative companies that HIKE invested in all embrace a sense of mission and responsibility, actively practicing ESG principles.

The entrepreneurial spirit is about being the person who constantly breaks boundaries. Controlling the flame led to human evolution. And today, where will the “flame” of AI and decarbonization lead humanity? Victor Hugo said, “What is history? An echo of the past in the future; a reflex from the future on the past.” The Old Man and the Sea said, “My big fish must be somewhere.” In the tides of history, HIKE continues to seek the next “big opportunities”.