Interview with Lawrence Wu
Background:
Lawrence Wu is a principal at thematic-first private investment firm Recharge Capital. He graduated from the University of Washington with a B.S. in Accounting and Finance. From 2015 to 2023, he worked at the accounting firm EY, but he left for investing after finding his role as an accountant predictable and boring. He currently also volunteers at the CFA Society, a professional organization that provides investment professionals with finance education, on its Social Committee and ESG Advisory Council.
What sparked your initial interest in a career in venture capital?
In my undergraduate and also in my earlier career, I knew that I wanted to work with people. And I knew that I wanted to work with companies and help them grow over time. And that bodes extremely well to what I do today at Recharge Capital, which is helping our founders grow their business, staying close to them, and also talking to prospective investors, prospective founders and understanding what new business model they're coming out with, and that sparked my interest.
What drew you to Recharge Capital specifically as a firm, and what makes Recharge Capital unique?
Recharge Capital is kind of a hybrid of venture capital and private equity. The way that we do it is that we have venture capital portfolio funds that identify anchoring technology assets that are either disrupting unit economics within a traditional sector or addressing the fragmented market out there. Once we identify these anchoring technologies, assets, and where they're performing well, we use a private equity-like mindset and provide and create an ecosystem of roll ups around our portfolio companies. Using women's health care as an example, we have a few investments in the women's healthcare space around the fertility space. The challenge for these fertility startups is that their B2B sales cycle is extremely long, selling to clinics. So we addressed that issue by having a separate $200 million investment vehicle in Korea that invests in and acquires clinics around developing markets. It creates a value loop between our technological assets and these clinics that we have rolled up. Now to fully capture the entire value in the sector—in this case, women's health care—we have to think about the entire patient lifecycle journey. For most of the women's healthcare space, it's going to be medical tourism, etc. We also went out and acquired a medical tourism company that funnels a tremendous amount of demand into our clinics. Our clinics utilize the technology solutions provided by our portfolio companies. That creates a value loop.
That draws me into Recharge because it is not a traditional venture capital model where we invest in a company, provide capital injection, provide guidance and network, and hope that companies return 50 times 100 times the entire fund. In my perspective, that traditional model, one, is slow, and two, doesn't doesn't address the risk and reward issue, whereas the Recharge model expedites the process of the exits. We create an organic path by creating this ecosystem and, from a personal perspective, one that creates and provides a unique experience where I'm investing, but at the same time I'm operating these businesses. I wouldn't say directly operating, but I've been involved in the operation of creating these holding companies.
And secondly, the sectors—Recharges is in the business of thematic focus investment. So we invest in things that we have high conviction over. Right now, we invest in women's healthcare technology and overall health care. We invest in fintech infrastructure that is addressing the different frictions in the economy. We also invest in things like synthetic biology, making supply chain management much cleaner and much more carbon efficient, etc. I think every sector that we invest in connects really well to me on a personal level, because I'm a strong believer in impact investing or ESG investing. If we have the capability of investing in great startups, then we should put the money where it has a potential positive impact on the world. And that is what Recharge is doing.
You talked in your answer about all the different sectors that Recharge Capital involved in, from fintech infrastructure, women's healthcare, synthetic biology and more. Is there any specific sub sector that Recharge Capital is currently involved in that you personally are most excited about?
I'm very excited about women's healthcare specifically. By 2045, it is estimated that about 50% of couples will need IVF services to have the next generation. The issue is that from 2020 to 2021, using one year as an example, less than 1% of investment overall in healthcare is specific to women’s healthcare. Historically, researchers and investors have been operating under the assumption that men and women are the same. If a drug or product works in a man, it works in a woman. But you know that's just not the case. I have a wife. She's very different from me. And her behavior is completely different from mine. So investments that specifically target women are a wide space that not a lot of investors have targeted into, and whenever you have an under invested sector, it will provide outsized returns. I'm very excited about women's health care. I think it's addressing a significant issue in the world—declining birth rates—and also it empowers women to delay their pregnancy. It's a sector that I'm excited about both from the financial return perspective and also from what it’s bringing to the world.
So now, I'd like to talk more about your specific role at Recharge Capital and what that entails on a day-to-day basis. What do you find most rewarding about your role and what do you find the most challenging?
I feel like they go hand in hand. The most rewarding part is I get to work with founders, and that honestly is the most exciting part. I have the unique opportunity to work with people that have ideas that I wouldn't have been able to come up with myself, and have the ability to empower their ideas. Just thinking about that gives me goosebumps—having the ability to empower a person to achieve their dream.
But at the same time, that is also the most challenging part. Every single day, I talk to more founders than I can manage. My schedule gets quite crazy. Managing that schedule and balancing that versus other aspects of my day to day job—portfolio management, talking to investors, operational things that I have to handle at Recharge—is the most challenging part. But at the same time, I'm always encouraged when I talk to founders and by their feedback, so I'm still enjoying the process.
Moving away from your role in venture capital, I wanted to talk about the social service you did in Taiwan. Did that help you develop any skills that you use in your current job?
That's a great question. I never thought about that. To give you a little background, I was an English teacher at a very rural middle school. These are kids that can't speak English at all at very rural middle school—no convenience store in a five mile radius, middle of nowhere in the mountains. It gives me two different perspectives. One is that it makes me much more empathetic, because when you grow up in a certain type of family, when you work certain types of jobs, when you go through a certain type of education system, the people around you are kind of stagnant. You're always with a certain socioeconomic class of people. But as an English teacher in such a rural place, some of these families are extremely miserable. It tells me the importance of going out of your comfort zone and seeing things that you wouldn't be able to see otherwise. So that aspect provides me with a unique angle when I talk to founders. It makes me much more able to connect with the founders.
Also, working with students, you have to be extremely patient. So because of that experience I’m an extremely patient person now. We're in a long game in an education system. We're teaching something, but you're not expecting the person to grow overnight, you're not expecting the person to learn something overnight. And that is exactly the case with venture. You're investing in something that you're hoping that you can exit in 8 to 10 years, you’re hoping the product works well in whatever market it is in. So having that mindset—understanding that everything we do in both education as well as venture investing is a long term game—that plans everything that goes after from building out your network. The way that you help a company grow, strategize, or go to market—everything surrounds the idea that this is a long term game.
I also wanted to talk more about the current social service that you do. So I know you volunteer at the CFA society in Los Angeles on the Social Committee and the ESG Advisory Council. So what brought you to these roles? And are there any connections to your work at Recharge Capital?
I volunteered at the CFA society at the beginning for selfish reasons. Quite frankly, at the peak of the pandemic, people are online and it's really difficult. I'm the type of person who likes to talk to people. When I was working at an office, I always got to meet new people on different floors. I get to meet people at lunch. But when everything is remote, it's extremely hard to meet people online. And I've been married to my wife for 12 years, so it's not like I've ever used a dating app. I’d never had a tool to meet new people in online environments. Our social club at CFA is a way for me to connect to new people that I might share mutual interest with. We plan different events, from social hikes to TopGolf, to happy hours to coffee tastings, etc. Some of them are online, some of them are in person, but it provides me an opportunity to meet people.
The ESG committee is a bit different. Like I mentioned, impact investing, ESG investing, are something that I personally believe in. Whatever role you're in, whether you're investing, consulting, social engineering, whether you are leaving a positive legacy is what defines who you are. We have an ESG mandate at CFA, one from an educational perspective, teaching people what ESG is. ESG has different aspects. E, S and G are all different things from a financial perspective, from an engineering perspective, from a scientific perspective, and also from a political perspective. So we bring a lot of educational content to our network that will help them understand the different aspects of all these different topics.
Is there any advice that you would give to students about building their careers? And do you have any advice specifically for students who are interested in either venture capital or impact investing?
I think, generations, including my generation of millennials and your generation, Gen Z, we have a tendency to be extremely impatient. We want results immediately. When we make an investment, we want to take higher risks so that we make money quicker. We want to flip houses. So that leads to cutting corners, looking for the easy way out. But it is my belief, and we see that in the market all the time, that successful people, the true successful people always do the hard work over a long period of time. We have to understand that whatever we do is a long game, just like in education, just like in venture investing. And this is a long game. When you understand that it is a long game, you build all the building blocks for your short term goals. So you always have to first start with, “What is my vision? What is my ‘why’ long term?” And then you build all the short term milestones.
Now for students who want to enter into venture space, I would say two things. I would advise against entering venture space out of college because I would challenge students to think about what you are bringing to the startup founders you are investing in. As a college student, you really don't bring a lot of technical expertise, and you also don't bring a unique network. You also don't build the experience that you need in Recharge to build the ecosystem. So I would challenge students to either build all their financial knowledge, whether through the traditional route in banking, consulting, accounting, or immerse yourself into the industry. Whether the field that you're interested in is healthcare, whether the field that you’re interested in is social engineering, throw yourself into the industry and learn the hard way on the industry expertise. And then you can think, “This is what I did. This is what I bring to this.” And what is so interesting is that, when you're in the industry—that's the best route in my opinion—you get to meet people that you have mutual interest with. You find entrepreneurs in the early stages, and you also potentially find partners that you can work closely with. In my field, it's very rare that peers of mine create a startup company. At Facebook, at Amazon, a lot of the team members go out and found something great. In that field, you have the early stage opportunity to invest as a friend or coworker. $5,000 may become five million, and that's access that most people do not have. So I would strongly encourage people to go into industry. I strongly encourage people to build financial expertise and use that to think about what you can bring to the VC ecosystem.
Impact investing is extremely challenging because you're always balancing financial return and also social return. And the issue is that financial return is easy to measure. That's the money you make. Social return is extremely difficult to measure. And usually, the impact that you make on the social world or the environmental world, you don't see that today. You might see that 100 years from now. So I would say, start with a small thing. Start with something around you. Do the right thing around you. And then continue to be aware of the impact that you make on the everyday things that you do. And from there you identify what you are passionate about. Impact investing is extremely broad, ESG is extremely broad. Environmental is different from social, social is different from governance, and it is almost impossible to address all three at the same time. So be aware and cognizant of the small things that you're doing every single day and identify the big trend that you're going to address.