A brand new enterprise agency referred to as Leitmotif has been on a quiet blitz for the final 16 months, funding round 20 startups broadly targeted on decarbonization. Its portfolio consists of EV firms, area and battery performs, and 4 nuclear fusion startups. However the agency has solely mentioned its funding is from “European industrial pursuits.”
Now, Leitmotif has instructed TechCrunch the place the cash got here from: the Volkswagen Group.
The German automotive large has dedicated $300 million to Leitmotif’s first fund and is its sole restricted companion; Leitmotif has deployed roughly one third of that up to now.
And Leitmotif, in response to the younger agency’s managing companions Matt Trevithick and Jens Wiese, needs to spin up successive funds that draw in additional European industrial curiosity past Volkswagen. (A spokesperson for Volkswagen Group declined to remark citing the communication blackout interval forward of its annual assembly later immediately.)
It’s an formidable effort. Securing funding for {hardware} startups, particularly ones with a severe manufacturing part, has been robust the previous few years. However Trevithick believes it’s the correct time to attempt to spend money on these sorts of firms.
“Expertise has at all times been a driver of human progress, and I feel america is about to supercharge that,” he instructed TechCrunch. “I feel the subsequent a number of years are about to provide a variety of technical capabilities in america that the remainder of the world will marvel at.”
Leitmotif can also be constructing a transatlantic fund whereas the geopolitical setting is being strained by the Trump administration.
Regardless of that turmoil, Wiese – who was the pinnacle of Volkswagen Group’s M&A, Funding Advisory, and Partnerships division earlier than beginning Leitmotif – mentioned the overarching objective of the brand new agency is to “create a bridge between the European industrial institution and the US innovation ecosystem.”
Precedence one: earn cash
Trevithick and Wiese mentioned Volkswagen had a high precedence when it agreed to spend money on the fund: earn cash.
“At the beginning, that is about establishing a profitable enterprise agency,” Wiese mentioned.
Whereas Volkswagen Group rakes in a whole bunch of billions of {dollars} per 12 months in income, Wiese mentioned getting cash continues to be vital partially as a result of it’s “how the trade retains rating.”
After that, the VC agency mentioned it plans to spend money on “class defining firms inside our fields of curiosity,” in response to Wiese, and likewise establish “new pockets of innovation” that would profit the Volkswagen Group.
Wiese mentioned he expects roughly one quarter of Leitmotif’s portfolio over time to work together with Volkswagen and its myriad manufacturers.
EV truck startup Harbinger is one instance. Leitmotif co-led Harbinger’s $100 million Series B in January, and Wiese mentioned the startup has had discussions about collaborating with Volkswagen’s trucking division.
Geographically, Leitmotif’s funding technique is structured in order that roughly 70% of its capital will likely be deployed within the U.S., with the opposite 30% being invested within the E.U. The agency will keep workplaces in each Palo Alto and in Munich.
Trevithick mentioned 70% of Leitmotif’s international investments on this first fund will likely be made in startups which can be “fixing immediately’s identified issues” and exist in “billion greenback plus markets with prospects prepared to purchase the innovation.”
The opposite 30% of the fund will likely be targeted on what he referred to as “revolutionary innovation” that may create “billion greenback markets within the 2030s and past.”
Up to now, this technique has led to investments in battery recycling firm Redwood Supplies, reusable rocket firm Stoke House, and even round polyester startup Syre. Leitmotif has publicly backed 13 startups to this point, although there are extra in its portfolio that haven’t been introduced.
Leitmotif will ultimately produce other funds; Trevithick and Wiese mentioned they’re significantly eyeing robotics and AI subsequent. Volkswagen may have the correct to spend money on these if it chooses, however Leitmotif is impartial and, for now, targeted on ending out its first fund.
Timing is the whole lot
Late 2023 was arguably the worst time for startups in latest reminiscence to lock down giant funding rounds, particularly ones targeted on {hardware} or “deep tech,” due to excessive rates of interest.
Trevithick mentioned that made it a good time to begin Leitmotif.
“It’s in down markets when the sturdy firms separate from the weak. In a bubble, everybody will get funded,” he mentioned.
That fundraising slowdown triggered different companies to take fewer dangers outdoors the startups they have been already invested in, Trevithick mentioned.
“There have been much less new {dollars} accessible to fund good firms that have been there, as a result of everybody obtained myopic about their very own portfolio,” he mentioned. “I feel that’s why we obtained a whole lot of inbound curiosity to take part in rounds that, within the bubble time, possibly we wouldn’t have had entry to.”
That curiosity got here largely due to Wiese’s and Trevithick’s backgrounds.
Wiese spent practically 8 years at Volkswagen Group, the place he ran mergers, acquisitions, and investments for the German automaker. Throughout this stint at Volkswagen, Wiese developed what he referred to as “fairly a deep community into the enterprise neighborhood, each in Europe and within the U.S.” That included forging a relationship with battery maker QuantumScape, the place Wiese was a board member till 2024.
Trevithick, in the meantime, was a companion at Venrock for a decade. There, he targeted on making investments in inexperienced vitality in the course of the authentic clear tech growth within the early 2010s, along with his highest-profile wager being an early one on battery maker Atieva – the corporate that ultimately grew to become Lucid Motors.
Investing, advising, and guiding firms via the next clear tech bust was helpful expertise for navigating the uncertainty at the moment plaguing the trade, Trevithick mentioned.
Whereas many company “internet zero” targets are being both hedged or deserted outright, Trevithick mentioned the clear tech trade is “beginning in a a lot better place this time round.”
Plus, Trevithick mentioned he believes the unpredictability will current extra alternative for companies like Leitmotif — and the startups it backs.
“I feel we will all agree it’s simply going to be a extremely risky setting. Which ought to disproportionately favor entrepreneurs, startups, and enterprise capitalists,” he mentioned.
“We really feel very assured about our portfolio,” Wiese added. “Sure, [decarbonization] is our overarching theme. On the similar time, we spend money on firms the place we’re satisfied they’ve the enterprise case to succeed no matter what, let’s say, the theme of the day is.”
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