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 corporations, house and battery performs, and 4 nuclear fusion startups. However the agency has solely stated 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 big has dedicated $300 million to Leitmotif’s first fund and is its sole restricted accomplice; Leitmotif has deployed roughly one third of that to this point. Throughout a convention on Tuesday, Volkswagen Group’s CEO Oliver Blume stated Leitmotif’s investments might assist decrease the automaker’s carbon footprint and develop a “round financial system inside and outdoors” the corporate.
“Volkswagen tradition is group tradition,” he stated.
Leitmotif needs to go even additional, in keeping with the younger agency’s managing companions Matt Trevithick and Jens Wiese. They hope to spin up successive funds that draw in additional European industrial curiosity past Volkswagen.
It’s an formidable effort. Securing funding for {hardware} startups, particularly ones with a severe manufacturing part, has been robust the previous couple of years. However Trevithick believes it’s the suitable time to attempt to spend money on these sorts of corporations.
“Know-how has all the time been a driver of human progress, and I feel the USA is about to supercharge that,” he instructed TechCrunch. “I feel the subsequent a number of years are about to supply various technical capabilities in the USA that the remainder of the world will marvel at.”
Leitmotif can 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 – stated 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: generate income
Trevithick and Wiese stated Volkswagen had a prime precedence when it agreed to spend money on the fund: generate income.
“Firstly, that is about organising a profitable enterprise agency,” Wiese stated.
Whereas Volkswagen Group rakes in a whole lot of billions of {dollars} per 12 months in income, Wiese stated being profitable continues to be necessary partially as a result of it’s “how the business retains rating.”
After that, the VC agency stated it plans to spend money on “class defining corporations inside our fields of curiosity,” in keeping with Wiese, and in addition establish “new pockets of innovation” that might profit the Volkswagen Group.
Wiese stated 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 Sequence B in January, and Wiese stated 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 probably be deployed within the U.S., with the opposite 30% being invested within the E.U. The agency will keep places of work in each Palo Alto and in Munich.
Trevithick stated 70% of Leitmotif’s international investments on this first fund will probably be made in startups which can be “fixing at present’s identified issues” and exist in “billion greenback plus markets with prospects prepared to purchase the innovation.”
The opposite 30% of the fund will probably be targeted on what he referred to as “revolutionary innovation” that can create “billion greenback markets within the 2030s and past.”
Thus far, 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 so far, although there are extra in its portfolio that haven’t been introduced.
Leitmotif will ultimately produce other funds; Trevithick and Wiese stated they’re notably eyeing robotics and AI subsequent. Volkswagen can have the suitable to spend money on these if it chooses, however Leitmotif is unbiased and, for now, targeted on ending out its first fund.
Timing is every part
Late 2023 was arguably the worst time for startups in current reminiscence to lock down giant funding rounds, particularly ones targeted on {hardware} or “deep tech,” because of excessive rates of interest.
Trevithick stated that made it a good time to begin Leitmotif.
“It’s in down markets when the sturdy corporations separate from the weak. In a bubble, everybody will get funded,” he stated.
That fundraising slowdown precipitated different companies to take fewer dangers outdoors the startups they had been already invested in, Trevithick stated.
“There have been much less new {dollars} accessible to fund good corporations that had been there, as a result of everybody bought myopic about their very own portfolio,” he stated. “I feel that’s why we bought a number 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 because of Wiese’s and Trevithick’s backgrounds.
Wiese spent almost 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 group, 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 accomplice at Venrock for a decade. There, he targeted on making investments in inexperienced power 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 corporations by means of the following clear tech bust was invaluable expertise for navigating the uncertainty presently plaguing the business, Trevithick stated.
Whereas many company “internet zero” targets are being both hedged or deserted outright, Trevithick stated the clear tech business is “beginning in a a lot better place this time round.”
Plus, Trevithick stated 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 stated.
“We really feel very assured about our portfolio,” Wiese added. “Sure, [decarbonization] is our overarching theme. On the identical time, we spend money on corporations the place we’re satisfied they’ve the enterprise case to succeed no matter what, let’s say, the theme of the day is.”
This story has been up to date with feedback from Volkswagen Group CEO Oliver Blume.