Clean Returns

Long before founding Emerald Technology Ventures, a Zurich-based international clean technology venture capital firm managing over €1 billion in assets, Gina Domanig (BS Finance ’85) was finishing her master’s degree in international management and not sure what to do next. Without the intervention of one of her professors at the Thunderbird School of Global Management, Domanig’s career might have taken a very different turn.

Enrolled in a joint MBA program at Thunderbird and ESADE in Barcelona, she was offered an intriguing job at a winery in Spain.

“I almost took it — until I told my banking professor about it,” Domanig recalls. “He said, ‘At least go and interview with some banks.’ ” The professor helped set up interviews in Chicago, her hometown, and she also arranged to meet a Thunderbird friend and classmate working there.

“We met for lunch and he brought one of his buddies with him,” she says. Only afterward did she learn that the “buddy” was the classmate’s boss at Swiss Bank Corporation (now a part of UBS).

“It was a disguised interview. I could have killed him,” Domanig jokes. Replaying the lunch in a mental doom loop, she regretted much of what she’d said.

“But I got the job.”

So began Domanig’s three-decade career in finance, which included serving as head of mergers and acquisitions at Sulzer AG, where analysis of regulatory and geopolitical trends led her and her colleagues to believe sustainability would become a major driver of change in the industrial sector.

“In hindsight, it was probably a little bit too early to have that conviction,” Domanig says. She left Sulzer to join a small asset management company focused on sustainability, and from there launched Emerald in 2000 — the year the dotcom bubble burst, leading to a three-year plunge in startup investment.

“It was a very difficult time. People considered venture capital risky. Nobody wanted to hear about sustainability,” she says. Still, she raised €100 million from high-net-worth individuals, insurance companies, pension funds, corporations, and family offices — “anyone who would give us money. In retrospect, it was a miracle that we could raise a fund in that environment.” And not just any fund — it was Europe’s first clean technology venture fund.

“Gina was successful in building an ecosystem of like-minded investors and partners in clean technology — a community of like-minded people who like to do deals together,” says Susan Kish, a green technology entrepreneur and friend who helped Domanig produce an annual clean energy conference during that time. It gained international traction and is still strong more than 20 years later.

“She acted globally like few funds did, when the risk profile differed. Solar, wind, and battery technologies were not proven.”

Emerald did have a moat of sorts: While few investors realized the importance clean technology would soon assume, those who did had few alternatives for putting money into the space.

Today, Emerald’s investors are large industrial corporations, including Caterpillar, Michelin, WM, Chevron, and Ecolab, and power, packaging, and chemical companies across the U.S., Europe, Asia, and the Middle East. Emerald connects these giants with startups, which, critically, have begun to prove their business value.

“We invest in companies that already have some commercial revenue. We face minimal technology risk because they’ve already developed their technology,” Domanig explains.

That’s likely one reason Emerald’s startup failure rate is less than 10%, despite research showing that more than 75% of venture-backed startups fail. Many of the companies Emerald has backed have partnered with the same corporations the fund connected them with.

The venture fund’s corporate-centered business model also helped it avoid trouble during the clean technology hype cycle of 2005–06, when generalist venture capital firms (“We call them ‘tourists,’ ” Domanig says) jumped into the field without fully understanding its dynamics.

“A lot of money came into our sector and drove up valuations. While corporate VCs sometimes invest at inflated prices, you can’t just spray-and-pray in this sector — industrial corporations won’t pay those same inflated valuations when it comes to acquisitions.”

While many VCs got burned and left, Emerald held on with its solid network of industrial investors. It continued to do so through the Great Recession.

“Many of our peers did not survive,” Domanig says. “We were lucky because we had a very strong value proposition for corporations.”

Emerald adds value for industrial investors by backing startups that help them reduce their environmental footprint and move closer to achieving their net-zero targets. It also helps them satisfy customers and stakeholders demanding better energy efficiency and sustainability.

Emerald invests in early-stage companies — typically early-revenue and still developing commercially viable products — with technology solutions ranging from electrification and precision irrigation to infrastructure monitoring and sustainable fuels. While 40% of these initiatives focus on clean energy, many approach it in unconventional or surprising ways.

“Everybody knows about electric cars, but there are a lot of other areas still dependent upon fossil fuels that would be prime electrification candidates,” Domanig says, rattling off a list that includes cargo vessels, satellite launchers, and airport ground equipment.

Emerald closely monitors environmental news to help maintain its edge. For example, it recently invested in an Australian company addressing problems caused by PFAS, the headline-grabbing “forever chemicals” that accumulate in landfills and leach into groundwater.

In addition to gauging startups’ financial viability, the fund has the chops to evaluate them from a technology perspective.

“You need a strong understanding of the engineering and science behind solutions. Most of my colleagues have technical degrees,” Domanig says.

Though investor ROI is a must, her goals for Emerald extend beyond dollars and cents. “It’s really about enabling companies with the potential to have a serious impact on the climate challenges we face to get to the market,” Domanig says.

Kish says that Domanig’s success as a change agent results from her business acumen and personal qualities that set her apart. “Gina commands respect and earns your affection because she is genuinely caring and supportive. She acts with integrity; partners and investors in her sector know they can rely on her.”

Still, effecting change isn’t easy, partly because the sector Emerald serves can’t turn on a dime.

“These are very large industry incumbents that have existed for decades and have invested trillions into doing things the way they were done in the past,” Domanig says. “There has to be some economic justification for change. Even if the costs are the same, changing the status quo can still be hard.”

But sometimes things just click, especially when you’re able to present the right solutions to the right people at exactly the right time — and Domanig says these magical moments are what inspire her and keep her going.

“I like making the world a better place — and generating attractive financial returns for the people who entrust us with their money,” she says.