Nuclear Investor: Is Vietnam’s future defined by nuclear power? | Tiến Nguyễn, Earth VC | EP 356

Key Concepts:

• Deep Tech
• Climate Change
• Venture Capital (VC)
• Nuclear Energy (SMR - Small Modular Reactors, Generation 4)
• Net Zero
• Product-Market Fit
• Founder-Industry Fit
• Frugal Innovation
• Due Diligence
• Criticality (Nuclear)

1. Introduction and Background

• The podcast "Vietnam Innovators" features Anthang, General Partner of Earth VC, a venture capital firm focused on climate tech.
• Anthang's background involves seeking challenges, leading him to focus on climate change as the biggest challenge of our generation. He believes venture capital is the best way to encourage solutions.

2. Climate Change Challenges in Emerging Markets like Vietnam

• Climate change impacts are increasingly visible in Vietnam, including brutal heatwaves (e.g., 50-55°C in India), increasing heat in Vietnam, and natural disasters like floods and typhoons.
• Asia is warming twice as fast as the rest of the world due to economic growth.
• Economic costs are significant: a hydropower system failure cost Vietnam $2.5 billion (0.5% of GDP) last year.
• The Mekong Delta is sinking at 4 cm per year, threatening food production.
• "When we founded Earthb people just see climate change through uh the TV but now you can see it every day outside this room."

3. Earth VC's Investments and Impact

• Notable investments include Blecala (Sweden) and Alo Atomic (USA).
• Alo Atomic's valuation increased from $60 million to $450 million within a year (5x multiple).
• Earth VC invests in nuclear technology as a solution for clean energy, despite public concerns.
• "If you look at more than 50 scenarios of um energy clean energy in this world, there's no way that we can achieve net zero soon enough without nuclear technology."
• Analogy: Early cars were dangerous, but investment and development made them safer. Nuclear technology can follow a similar path.

4. Nuclear Energy: Addressing Fears and Potential for Vietnam

• Fear of nuclear energy stems from misunderstanding and media exaggeration of nuclear weapons.
• Nuclear technology is powerful and can be used for good (energy generation) or bad (weapons).
• Anthang paints a picture of a dystopian future in 2040 Saigon if climate change is not addressed:
  • Extreme heat and power outages.
  • Flooding disrupting transportation.
  • Data center failures.
  • Food shortages and rising prices.
  • Carbon quotas limiting energy use.
• "Imagine what will happen in the next um 10 20 years if we do not do anything and if we do not invest enough into deep tech for climate."
• A glass of nuclear material can provide enough energy for a lifetime.
• SMRs (Small Modular Reactors, Generation 4) are smaller (5-10 MW) and can be placed underground near power-consuming facilities like data centers.
• Alo Atomic is developing a 5 MW SMR designed to be placed below data centers.
• Separating reactors reduces risk and provides localized energy.

5. SMR Development Timeline and Costs

• "Criticality" (first SMR) is targeted for 2029.
• Current stage: testing reactors with non-nuclear cores.
• Cost is currently difficult to estimate but is expected to be competitive with current electricity prices at scale.
• Alo Atomic aims for assembly-line production and easy deployment (containerized).

6. Vietnam's Potential and Challenges

• Anthang dreams of SMRs deployed globally, including remote locations like the South Pole.
• Vietnam may lag behind developed countries by 5-10 years in adopting SMR technology due to policy and talent gaps.
• There are Vietnamese-American scientists working in nuclear labs (e.g., Idaho National Lab).
• Vietnam is exploring nuclear energy, including working with Rosatom (Russia) on Generation 3 reactors.
• A professor at Sino University (Beijing) noted that Vietnam needs to address its energy challenges before becoming a manufacturing powerhouse.
• Vietnam's net-zero commitment by 2050 is unlikely to be achieved without nuclear technology.
• AI's increasing energy demands will further necessitate nuclear power.

7. Earth VC's Competitive Advantage

• Earth VC is a global firm run by Vietnamese people, based in Vietnam due to its frontline position in the fight against climate change.
• They offer more than just financial investment; they understand the technology and can help companies reach milestones and raise further funding.
• Earth VC can translate complex solutions into language that capital markets understand.
• They act as a bridge to the Asian market for high-tech companies.
• Anthang met with the Prime Minister of Vietnam, creating opportunities for portfolio companies.

8. Deep Tech Investment in Vietnam

• There are limited deep tech energy businesses in Vietnam.
• Vietnam lacks a long history of fundamental science compared to Europe and America.
• Earth VC focuses on finding and helping good deals in Vietnam.
• It's crucial to avoid misidentifying "look-alike" deep tech companies.
• The speaker expresses concern about continued construction along the Saigon River despite flood predictions.

9. Advantages and Limitations of Deep Tech Investment

• Deep tech addresses the complex problem of climate change using science and advanced engineering.
• Deep tech companies have high barriers to entry (e.g., licenses, specialized knowledge).
• Deep tech requires more than just coding; it requires access to specialized materials and expertise.
• Milestones are easier to track in deep tech (e.g., satellite launches).
• Finding deep tech scientists requires years of hard work and networking.
• Earth VC works closely with universities and innovation centers, providing financial structuring and attracting finance.
• They identify clusters of scientists globally (e.g., Cambridge for bioscience, Idaho National Lab for nuclear).
• Earth VC has a research team run by PhDs to analyze technology and market viability.

10. Earth VC's Investment Criteria

• Earth VC invests in less than 1% of the 3,000+ deep tech startups in their pipeline.
• They have a strict due diligence process, including tricky questions and an AI core model.
• They assess:
  • Product-market fit.
  • Founder-industry fit (experience, expertise).
  • Fund fit (alignment with climate change mandate, return potential).
• They prefer founders who can articulate how Earth VC can help them beyond just providing capital.

11. Conclusion and Call to Action

• The podcast concludes with a call for frugal innovation, citing India's low-cost space program as an example.
• Anthang wants to see more stories of successful frugal innovation in developing countries.
• He encourages scrappy entrepreneurs and those working on impactful deep tech solutions to reach out.
• The host praises Earth VC's specific focus and its presence in Vietnam, hoping it will motivate the next generation of Vietnamese entrepreneurs and investors.

Main Takeaways:

• Climate change poses significant challenges to emerging markets like Vietnam, requiring innovative solutions.
• Nuclear energy, particularly SMRs, offers a promising path to clean and reliable energy, despite public fears.
• Earth VC is a venture capital firm dedicated to investing in deep tech companies addressing climate change, with a focus on product-market fit, founder-industry fit, and fund fit.
• Deep tech investment requires rigorous due diligence, specialized expertise, and a long-term perspective.
• Frugal innovation and collaboration between developed and developing countries are crucial for addressing global challenges.