(Bloomberg) -- Some of the world’s most controversial and crisis-prone sectors are exactly where Lorin Gu wants to put his firm’s $6 billion of capital.
Women’s health, semiconductors and cryptocurrencies all present key opportunities for dealmaking, said the 29-year-old founder of investment firm Recharge Capital.
The firm, which raised funds from backers including Bain & Co., Walt Disney Co.’s private-equity arm and William Ford of General Atlantic, seeks investments in “high-potential, highly-lucrative disrupted sectors,” Gu said in an interview.
Those include women’s health, where it’s been an investor in clinics offering fertility services such as in-vitro fertilization as well as those providing abortions. Since the supercharged abortion debate in the US underscored the importance of choices surrounding fertility, it’s doubled down, Gu said.
“Unfortunately the world has played out exactly how we imagined it,” Gu said from the firm’s New York office. “We knew fertility was going to become a hot topic.”
Recharge, which also has offices in Singapore, Hong Kong and Taipei, has a staff of 50 people between 29 and 43 years old, more than half of whom are women. It generated 29% gross returns in 2021 and nearly 13% this year to date, according to people with knowledge of the firm’s performance.
Following the US Supreme Court’s decision in June ending the constitutional right to abortion, Recharge will expand its investments in companies that offer women’s reproductive care. Gu’s goal is to make it cheaper and more accessible, especially to women in states with restrictions, he said.
Private clinic owners in the US are thinking about how can they combine with other companies in a “roll-up style” to serve people across state lines, helping women who live in areas where abortion is limited, he said.
The debate over abortion is likely to spread to other nations, so Recharge’s investments can help make reproductive services available to more women at reduced costs abroad, Gu said.
He also wants to make other fertility services such as IVF less costly, by building on existing investments in the clinics. Recharge holds stakes in clinics in the US, Europe and Southeast Asia, and is working to expand its international network.
“Fertility has been an overlooked sector because people thought it impacted a small percentage of the population who are naturally infertile,” Gu said. “More and more people want to have the capability of making sure that, through IVF, their children are perfectly healthy.”
“The issues we focus on are narrow but still have room for innovation and growth, especially around emerging markets,” said Gu, who worked at Blackstone Inc. and Cyrus Capital before establishing Recharge in 2019.
Recharge targeted semiconductors launching a strategy in 2020 and boosted its wager as the pandemic and geopolitical tensions aggravated a global shortage of the chips. It joined Carlyle Group Inc. and others to invest $300 million in Airoha, one of the largest wireless-device chip manufacturers.
The firm also looks for crossover between semiconductors and crypto, another disrupted industry of late. The metaverse is powered by semiconductors, Gu said, forming the infrastructure from which crypto continues to build.
Gu tapped his roommate at Harvard University, John C. Lo, as a managing partner at Recharge. Lo runs the crypto-focused investment fund and lab, Omakase, and was a core contributor to the DeFi trading platform Sushi.
With the hedge-fund like strategy, Recharge looks for opportunities to bridge traditional and decentralized finance, building its own DeFi products or investing in outside firms like Percent Technologies, a fintech that combines crypto and credit markets. Most traditional firms trying to enter crypto don’t have access, or face regulatory limits, and Recharge looks for ways to provide the entry point, Lo said.
“Digital assets will provide efficiency in traditional finance, and vice versa,” he said in an interview.
The recent meltdown in crypto markets hasn’t deterred Lo. He sees crypto having a perception problem amid news reports about tokens and scams. “In terms of the actual utilization and impact, its actually a small percentage of problems in the space,” he said.
Lo and his team are focused on the risks and inefficiencies of the developing crypto marketplace, including NFT’s. They’re working on ways to monitor investments and provide early warnings of a problem.
“We have seen and learned a lot of lessons. We’ve seen what works and what doesn’t,” Lo said. “Now is the time to build things that will last forever. DeFi will remain as the great experiment, and the metaverse will continue to test the rules.”
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