Source Code Insights | Source Code Capital's Dual-Carbon Investments: Exploring New Species Through Full-Industry-Chain Deployment

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Source Code Capital invests in technology-driven innovation,

and in the creation of lasting, real value.

Reprinted from: PEDaily

This was likely one of the hardest projects for investors to get into this year.

In August 2022, Sunwoda Vehicle Battery completed an 800 million yuan Series A round. The investor lineup was exceptionally star-studded, drawing significant industry attention. Two brothers from Maoming, Guangdong, had built Sunwoda Vehicle Battery — this year's fastest-growing power battery manufacturer by installed capacity. Shortly after the funding round, Sunwoda also partnered with the Yichang municipal government to plan a 30 GWh power battery production base.

Sunwoda focuses on fast-charging capabilities for electric vehicles, with its market share ranking rising sharply. Meanwhile, as a critical link in the dual-carbon industrial chain, the value and pricing of power battery manufacturers were growing at a pace beyond market imagination. Unfortunately, most top-ranked domestic power battery makers were already publicly listed companies, making such investment targets extremely scarce in the primary market.

Thus, competition for this round of Sunwoda funding was fierce. "I'd say it was one of the hardest projects to get into this year," remarked one investor from this round. Even institutions that ultimately made it onto the cap table saw their allocations reduced to varying degrees.

This scene was hardly unfamiliar. The current boom in new energy investment was plain for all to see — every VC you could name had deployed resources toward dual-carbon this year, with fierce project competition producing new stories daily. One investor had even experienced a company simultaneously inviting over a hundred institutions to a roadshow: no one-on-one discussions, standardized materials distributed to all, term sheets collected at a unified deadline. "It was purely about who moved fastest."

Sunwoda's latest round similarly drew the attention of all top-tier institutions. This time, Source Code Capital appeared on the investor list as one of the lead investors.

Conviction Over Fear: The Full Story of Source Code Capital's Sunwoda Battery Investment

The story begins earlier this year.

Just after the 2022 Spring Festival, in the first week of work, Yi Cao, founding partner of Source Code Capital, personally led a team to Shenzhen. The purpose: to meet Sunwoda's two founders, the brothers Mingwang Wang and Wei Wang. Wang Di, executive director at Source Code Capital's growth stage team, recalled that "colleagues from multiple business lines, even specialist teams, were mobilized." This spoke to Source Code's level of commitment.

At that time, Sunwoda had just completed its previous round with electric vehicle makers as the primary investors, and a new round had not yet commenced. Source Code Capital thus became one of the earliest "door-knockers" for this deal.

By mid-to-late March, Sunwoda officially launched its fundraising. Market conditions, however, had become somewhat concerning. By late April, new energy stocks led by CATL experienced a collective plunge, and Sunwoda's parent company was no exception — its market capitalization once dropped to around 33 billion yuan. Meanwhile, the battery business unit planned for independent spin-off was asking for a 30 billion yuan valuation. This cast a shadow over Sunwoda's ongoing fundraising, and some funds that had previously expressed clear investment intentions began to hesitate.

This was precisely when Sunwoda entered the critical IC decision-making phase at various institutions. Those that ultimately withdrew had one question: "How do I account for a company worth 30 billion-plus yuan spinning out a business valued at 30 billion yuan post-investment?"

Different voices also emerged within Source Code. The air at the final meeting was visibly filled with doubt, yet they ultimately chose to proceed — and without reducing their investment amount.

Wang Di recalled that this stemmed from Source Code Capital's conviction in several trends: user range anxiety had led most battery makers to focus on endurance technology paths. Sunwoda's push for fast charging hit a precise differentiation point. Strategic investments from two leading companies, Li Auto and Xpeng Motors, guaranteed customer demand. And the company had earlier done outsourced battery manufacturing for Apple, giving it experience serving major B2B clients up close. "In the end, conviction overcame fear. That's also the advantage of early-stage VC decision-making," he said.

The rest of the story is well-known: markets rebounded, many listed companies saw share prices rise more than fourfold, and by July when proposals were formally submitted, Sunwoda's popularity reached astonishing levels — with at least three times oversubscription. Sunwoda ultimately completed its 8 billion yuan new round smoothly.

Why did Source Code persist so strongly with Sunwoda? In fact, because Source Code Capital had invested in Li Auto early on, the team had already conducted deep research into the electric vehicle supply chain, enabling more accurate judgment of Sunwoda. Yi Cao candidly noted, "When we first invested in Li Auto, we didn't have comprehensive understanding of new energy. But now Li Auto is a strategic partner for Source Code's electric vehicle supply chain investments — a very important leverage point."

"Using Li Auto as a Leverage Point"

Investing Across the Supply Chain

From Li Auto to Sunwoda, this is a microcosm of Source Code's full supply chain layout for dual-carbon.

Tracing Source Code's starting point in new energy investment, we must begin with their capture of the intelligence trend — the foundation of intelligence is electrification. For instance, fuel vehicles often cannot achieve precise control, while electric motors can effectively control various parameters. Similarly, without cell and battery module support, products like robotic vacuums and robotic lawn mowers could not become cordless.

In梳理 Source Code's new energy investment脉络, Yi Cao noted that along the intelligence主线, electrification would drive upgrades to existing species and even create entirely new ones, thereby reshaping industrial chains and extending into new inventions and commercial opportunities.

The electric vehicle supply chain is the best illustration. Yiwen Hao, early-stage investor and managing director at Source Code Capital, explained that if you drew a coordinate system, the vertical axis would be "chain masters" like electric vehicle makers, while the horizontal axis represents the supply chain — with upstream raw materials on one end and downstream terminals on the other. "Starting from the chain master, whether electric vehicles or photovoltaics, you deconstruct the supply chain and understand the supplier landscape. Downstream demand can then be reverse-engineered to identify capacity gaps in upstream components or raw materials. Where domestic substitution opportunities exist, there may be innovation in new material replacements."

As vehicle brands grow stronger, supply chains mature and clustering effects emerge — this is why power battery manufacturers like Sunwoda surface and grow into major players.

Wang Di explained that fast-charging technology for electric vehicles demands not just cell requirements but also ultra-high-power charging station matching — meaning increased infrastructure investment, with correspondingly higher prices passed to end consumers. Li Auto and Xpeng Motors have explicitly committed to equipping new models with fast-charging cells and building their own ultra-fast charging stations. It is the active investment and scaled application by these "chain masters" that enables power battery cost reductions and the full commercialization of the fast-charging technology path.

Beyond this, electric vehicle brands' demand for domestic component substitution also catalyzes supply chain innovation opportunities. The earlier a "chain master" is in its development, the more opportunities may exist.

Investing around "chain masters" like Li Auto became an important strategy for Source Code's new energy supply chain layout. Electric vehicles represent an unavoidable, heavily weighted sub-supply chain within this.

Regarding Li Auto, Xingshi Wang, the Source Code Capital partner who led this investment, said, "Everyone cares about who supplies the Li ONE, what new suppliers L9's new features will bring out, and so on going forward. New features mean new markets." Of course, Xingshi Wang also cautioned that "the prerequisite for betting on suppliers is finding companies with real moats, not just short-term effects — doing well this semester only to be eliminated next semester."

For some of Li Auto's core components, the primary supplier may be overseas, while second and third suppliers are typically domestic. Beyond supply chain security considerations, there's also pricing. Previously suppliers engaged more in reverse engineering; now they increasingly possess forward R&D capabilities. After domestic substitution comes the next step: going global.

Ultimately, a supplier's commercial value still depends on the "chain master." Because this wave of new carmakers has demonstrated extreme product pursuit and patient supply chain refinement — similar in underlying logic to Apple and Tesla. The value of Apple and Tesla suppliers has already been validated in both primary and secondary markets.

In fact, Source Code Capital has shown great interest in Li Auto's suppliers, actively taking equity stakes: from primary to secondary and tertiary suppliers, from hardware to software, or hardware-software integrated companies, and materials-related companies. Source Code Capital even co-invests with Li Auto — Sunwoda brought together both investors.

A Full Supply Chain Layout Built on Electricity

Source Code Capital's dual-carbon investments haven't been limited to the application layer. They are systematically deploying around key links with electricity at the core.

Taking a broader industrial perspective, electric vehicles represent electricity consumption and distributed storage — the largest application of electrification, but not the only one. Parallel to electric vehicles at the application layer are robots, factory automation, and more. Application-side development drives the maturation of power infrastructure.

The implementation of the dual-carbon strategy means the power industry bears an important mission: transitioning from coal-driven generation to new energy substitution. Thus, from generation to grid integration to storage to consumption, a new type of power system is needed — behind dual-carbon lies not just an energy revolution, but also a digital transformation of the power system, involving materials, processes, and other smart manufacturing industries.

In Source Code's view, this is a comprehensive domain integrating energy structure, industrial upgrading, circular economy models, and green asset allocation.

After two years of accumulation, Source Code Capital has now deployed across the key "source-grid-load-storage" links with electricity at the core, making it one of the few primary market institutions with full supply chain coverage. "Source-grid-load-storage" refers to generation, grid, load, and storage. Xingshi Wang outlined Source Code's thinking and deployment:

First, source — the generation side. Source Code made a sole Series B investment in distributed clean energy company Liansheng New Energy, a clean energy power station operator focused on distributed photovoltaic generation, positioned at the wave of power structure adjustment with new energy as the main body. Especially after 2020, when photovoltaic power achieved grid parity and moved away from subsidies back to market-based systems, it would not be an exaggeration to say the photovoltaic industry was reborn.

Second, grid — transmission and new-type power grids. In this domain, Source Code has invested in companies including Deep Intelligent Control, Yungu Technology, and Senmuleishi.

Third, load — focusing primarily on electrified terminal tools, from fuel vehicles to electric vehicles, from corded to cordless tools like lawn mowers and electric drills. Source Code believes these consumer electronics should not be underestimated — each niche track could reach tens of billions of yuan in scale, with leading companies still doubling revenue annually.

Fourth, storage — with broader meaning, encompassing both electric vehicle power battery manufacturers like Sunwoda; Poweroak targeting the C-end market, whose distributed energy storage products focus on overseas markets and have captured a top-three global position; JD Energy, a block-based intelligent energy storage system solutions company; and storage safety company Meikesheng, which monitors internal conditions of storage batteries in real time.

Of course, since this is a full supply chain layout, "source-grid-load-storage" is not the end. All细分领域 that accelerate supply chain maturation are also within Source Code's sights.

For example, as lithium battery costs decline, basic petrochemical new materials find wider application; hydrogen energy, nano, and perovskite materials see new breakthroughs; and synthetic biotechnology directions gain new possibilities. Source Code has invested in new materials companies including Yaoneng Technology, Kaibu Electronics, and Dongheng New Energy.

Source Code Capital's investment list was not built overnight. Reportedly, they could use supplier lists to撬开 and deconstruct the electric vehicle supply chain. But to catch big fish in the green power infrastructure space, there was no clear map to follow — this is an irregular domain where big waters hold big fish. Frontline investment managers need deep diving capabilities, familiarity with important companies and key figures at host manufacturers, cell factories, and photovoltaic component makers, plus access to first-hand information.

For Source Code, which excels at technology investment, the first step was assembling a team with industry know-how and clarifying investment strategies and approaches. These invisible aspects are also a battlefield.

Why Source Code?

Grid parity for photovoltaic power in 2020 was an important watershed for the clean energy industry. Source Code sensed potential changes in the new energy sector and used this timing to roughly map out electricity-related industries, summarizing its investment主线 as "generation-transmission-distribution-consumption" — later the industry-standard "source-grid-load-storage" formulation.

In early 2021, Source Code's investment strategy meeting first discussed the new energy theme, reaching preliminary judgment that this was a "very big" opportunity. Less than a month later, the same investment theme appeared again — Wang Di recalled that in his years at Source Code, it was rare to see an investment theme scheduled for two strategy meetings.

At the second meeting, Source Code had basically clarified its macro layout for dual-carbon investment, pursuing full supply chain coverage. Based on project investment amounts and company lifecycle dimensions, investment teams covered everything from seed, early-stage to growth stage.

With direction set, talent and organizational building — always valued by Source Code — became urgent. They needed a team that could fight. Wu Fan and Wang Di handled growth stage investments, Yiwen Hao leaned toward early stage, and Xingchen Zhang led Source Code Yisu, the seed fund established in June this year. Despite different investment stages, industry research and investment paths within the same赛道 were internally connected with shared resources.

Wu Fan, a veteran with 17 years in the energy sector and one of CATL's early investors, joined Source Code in 2022. When Yi Cao extended the invitation, Wu Fan's foremost concern was: what is Source Code's most unique value in dual-carbon investment?

First, the investment team must possess strong cross-disciplinary research capabilities. He believed industrial and manufacturing sectors have special attributes — requiring not just ability to identify micro indicators like yield rates and mass production capabilities, but also basic judgment of frontier technology trends. Some early-stage projects even require finding valuable information from academic papers.

Second, forward-looking layout and MaHui ecosystem connectivity: In fact, before dual-carbon became a buzzword, Source Code had already deployed in green technology, robotics, smart manufacturing, and other sectors. Its established MaHui ecosystem connects nearly all major domestic tech companies. Source Code had internally mapped the resource support needed by manufacturing-attribute companies: first, connecting the "Big Five and Four Smalls" — core industry players and important investors; second, supply chain resources to ensure component supply even during scarcity. All this helped Source Code quickly find its position and approach in the new energy赛道.

Finally, Source Code's professional post-investment services — meeting portfolio companies' various needs. Startup companies most need organizational building capabilities, production line efficiency management, and solutions to problems from rapid personnel expansion. These soft issues sometimes precisely require external brainpower, even fighting alongside to solve problems.

One factor in Wu Fan's ultimate decision to join Source Code was that new energy investment competition was intensifying, making it increasingly difficult to differentiate from corporate venture capital. "Source Code operates as a team, emphasizing post-investment. From PE to VC, we can view this industry from new angles."

Looking back at Source Code's dual-carbon investments, an interesting episode occurred when Wang Di expressed investment interest to Poweroak. Founder Yin Xiangzhu could hardly conceal his surprise. Poweroak, a distributed energy storage company based in Shenzhen, had just completed a funding round, and Source Code was doing an add-on round. Yin Xiangzhu then spent considerable time researching who Source Code was, checking with existing shareholders about this dual-currency fund's investment style. To his relief, the more he learned, the more positive feedback he received.

To get the deal done, Wang Di also sent the founder multiple near-thousand-word messages explaining Source Code's understanding of energy storage and expressing the glory and dreams they shared for the industry. Wang Di said, "It may sound exaggerated, but at that time and in that situation, as an investor there was resonance."

In 2021, as a Poweroak investor, Source Code also connected new relationships — such as "client-side" CATL, and introducing TikTok marketing methods for Poweroak's overseas flagship product BLUETTI.

Additionally, Source Code recommended Lark to portfolio company Meikesheng Energy Storage. Previously, the company's bid document management had no online tool support; now the team could manage bidding processes through a BPM system. Under pandemic conditions, remote collaboration capability was a survival skill. And business process digitization further enhanced organizational capabilities.

Currently, dual-carbon investment heat has传导 to every corner of the primary market. For Source Code, maintaining rigorous investment论证 and delivering strong post-investment value-add — these standard procedures won't change with external market fluctuations.

The dual-carbon industrial chain is complex, with unpredictable market shifts. Photovoltaics in the past is the best example — a gathering place for billionaires, yet also a high-incidence zone for corporate bankruptcies. Today's heat doesn't guarantee tomorrow's scenery. Companies that successfully穿越 cycles are all results of long-term adherence to discipline and规律. Investment is no different.

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