A brand new mission company referred to as Leitmotif has been on a quiet blitz for the final 16 months, investment round 20 startups extensively thinking about decarbonization. Its portfolio comprises EV firms, area and battery performs, and 4 nuclear fusion startups. However the company has simplest mentioned its investment is from “Ecu business pursuits.”
Now, Leitmotif has advised Techmim the place the cash got here from: the Volkswagen Staff.
The German car massive has dedicated $300 million to Leitmotif’s first fund and is its sole restricted spouse; Leitmotif has deployed more or less one 3rd of that thus far.
And Leitmotif, in keeping with the younger company’s managing companions Matt Trevithick and Jens Wiese, desires to spin up successive budget that draw in additional Ecu business pastime past Volkswagen. (A spokesperson for Volkswagen Staff declined to remark bringing up the conversation blackout length forward of its annual assembly later lately.)
It’s an bold effort. Securing investment for {hardware} startups, particularly ones with a significant production part, has been tricky the previous couple of years. However Trevithick believes it’s the best time to check out to put money into a majority of these firms.
“era has all the time been a driving force of human development, and I feel the US is set to supercharge that,” he advised Techmim. “I feel the following a number of years are about to provide a variety of technical functions in the US that the remainder of the arena will surprise at.”
Leitmotif could also be development a transatlantic fund whilst the geopolitical setting is being strained through the Trump management.
In spite of that turmoil, Wiese – who was once the pinnacle of Volkswagen Staff’s M&A, Funding Advisory, and Partnerships department prior to beginning Leitmotif – mentioned the overarching function of the brand new company is to “create a bridge between the Ecu business established order and america innovation ecosystem.”
Precedence one: earn money
Trevithick and Wiese mentioned Volkswagen had a best precedence when it agreed to put money into the fund: earn money.
“At first, that is about putting in a a hit mission company,” Wiese mentioned.
Whilst Volkswagen Staff rakes in loads of billions of greenbacks consistent with yr in income, Wiese mentioned earning profits continues to be necessary partially as it’s “how the trade helps to keep rating.”
After that, the VC company mentioned it plans to put money into “class defining firms inside of our fields of pastime,” in keeping with Wiese, and likewise determine “new wallet of innovation” that would get advantages the Volkswagen Staff.
Wiese mentioned he expects more or less one quarter of Leitmotif’s portfolio over the years to have interaction with Volkswagen and its myriad manufacturers.
EV truck startup Harbinger is one instance. Leitmotif co-led Harbinger’s $100 million Collection B in January, and Wiese mentioned the startup has had discussions about participating with Volkswagen’s trucking department.
Geographically, Leitmotif’s funding technique is structured in order that more or less 70% of its capital will probably be deployed within the U.S., with the opposite 30% being invested within the E.U. The company will take care of places of work in each Palo Alto and in Munich.
Trevithick mentioned 70% of Leitmotif’s international investments on this first fund will probably be made in startups which can be “fixing lately’s recognized issues” and exist in “billion buck plus markets with consumers in a position to shop for the innovation.”
The opposite 30% of the fund will probably be thinking about what he referred to as “innovative innovation” that may create “billion buck markets within the 2030s and past.”
Up to now, this technique has resulted in investments in battery recycling corporate Redwood Fabrics, reusable rocket corporate Stoke House, or even round polyester startup Syre. Leitmotif has publicly subsidized 13 startups so far, although there are extra in its portfolio that experience no longer been introduced.
Leitmotif will in the end produce other budget; Trevithick and Wiese mentioned they’re specifically eyeing robotics and AI subsequent. Volkswagen can have the best to put money into the ones if it chooses, however Leitmotif is impartial and, for now, thinking about completing out its first fund.
Timing is the whole thing
Overdue 2023 was once arguably the worst time for startups in fresh reminiscence to fasten down huge investment rounds, particularly ones thinking about {hardware} or “deep tech,” due to top rates of interest.
Trevithick mentioned that made it a good time to begin Leitmotif.
“It’s in down markets when the robust firms break away the susceptible. In a bubble, everybody will get funded,” he mentioned.
That fundraising slowdown brought about different corporations to take fewer dangers outdoor the startups they had been already invested in, Trevithick mentioned.
“There have been much less new greenbacks to be had to fund excellent firms that had been there, as a result of everybody were given myopic about their very own portfolio,” he mentioned. “I feel that’s why we were given numerous inbound pastime to take part in rounds that, within the bubble time, possibly we wouldn’t have had get right of entry to to.”
That pastime got here largely due to Wiese’s and Trevithick’s backgrounds.
Wiese spent just about 8 years at Volkswagen Staff, the place he ran mergers, acquisitions, and investments for the German automaker. All through this stint at Volkswagen, Wiese advanced what he referred to as “moderately a deep community into the mission group, each in Europe and within the U.S.” That incorporated forging a dating with battery maker QuantumScape, the place Wiese was once a board member till 2024.
Trevithick, in the meantime, was once a spouse at Venrock for a decade. There, he thinking about making investments in inexperienced power right through the unique blank tech increase within the early 2010s, together with his highest-profile wager being an early one on battery maker Atieva – the corporate that finally become Lucid Motors.
Making an investment, advising, and guiding firms throughout the next blank tech bust was once precious enjoy for navigating the uncertainty lately plaguing the trade, Trevithick mentioned.
Whilst many company “internet 0” targets are being both hedged or deserted outright, Trevithick mentioned the blank tech trade is “beginning in a a lot better place this time round.”
Plus, Trevithick mentioned he believes the unpredictability will provide extra alternative for companies like Leitmotif — and the startups it backs.
“I feel we will be able to all agree it’s simply going to be a extremely unstable setting. Which will have to disproportionately want marketers, startups, and mission capitalists,” he mentioned.
“We really feel very assured about our portfolio,” Wiese added. “Sure, [decarbonization] is our overarching theme. On the similar time, we put money into firms the place we’re satisfied they’ve the industry case to prevail without reference to what, let’s say, the theme of the day is.”
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