TDK Ventures Inc, a corporate venture capital firm based in California, is looking to invest in Thai startups with deep technologies that can “unlock meaningful megatrends”, says its President Nicolas Sauvage.
Among those trends are next-generation materials and energy & clean technology, he said.
“We have not yet invested in Thailand, but I’m hoping you can help me find amazing entrepreneurs who are at the deep technology in any of these meaningful megatrends,” Sauvage said. “We also invest in connectivity and computing, industrial & robotics, and mobility.”
Sauvage was speaking on the topic “The State of Global Deeptech: A TDK Ventures Perspective” at the recent Corporate Innovation Summit (CIS 2024) in Bangkok.
Unicorn startups in stable
TDK Ventures started investing five years ago and now has three funds worth $350 million (11.3 billion baht). “We invested in 38 portfolio companies across these three funds,” he said. “We’ve had some early success which I’m very proud of, because it means our portfolio companies are contributing to society.”
According to the president, three of those startups are already at the Unicorn level, with a valuation exceeding $1 billion (32.4 billion baht). One of them is Ascend Elements, which manufactures advanced battery materials using valuable elements reclaimed from discarded lithium-ion batteries. “We invested when there were just 10 people, and now they are already at a $1.6 billion valuation,” he said.
Established in 2019, TDK Ventures is a corporate venture capital (VC) firm investing globally in tech startups. It is a wholly-owned subsidiary of TDK Corporation, a Japanese multinational that manufactures electronic components and recording and data-storage media.
According to its website, TDK Ventures invests in startups to bolster innovation in materials science, energy/power and related areas typically underrepresented in venture capital portfolios. The VC co-invests and supports promising portfolio companies by providing technical expertise and access to global markets where TDK operates.
Identifying potential disruption
Sauvage said that in selecting startups to invest in, TDK Ventures focuses on their potential regarding new markets, new business models, new innovations, and new technologies. “We’re not looking at what TDK is doing today, but where TDK wants to go. We also want to learn what could disrupt TDK before it disrupts us,” he said.
TDK, once a leading cassette-tape manufacturer, saw the disruption of its CD business by streaming media. “We don’t want this to happen to us where we get surprised, so we want to learn about this earlier. And that’s why TDK Ventures is investing in new frontier technologies that could become the future for us,” the executive said.
In selecting candidates for financing, TDK Ventures uses the so-called FIT method, which stands for “first principles-based investment thesis”, according to Sauvage. The method involves three steps:
- Doing deep explorations or “deep dive” into selected areas,
- Developing KPIs (key performance indicators), and
- Finding the “King of the Hill”, or the candidate with the highest potential.
The deep explorations are chosen by TDK Ventures’ investment team. “It’s bottom-up and passion-based. It’s something they are interested in learning deeply. So, they really deep dive into a topic they choose,” Sauvage explained.
According to its website, the firm’s various deep explorations include geothermal power, industrial software for factory operation, decarbonizing industrial heat, advanced cooling, quantum computing, and space-tech for IoT (Internet of Things) applications.
Finding the ‘King of the Hill’
The startups eligible for TDK Ventures investment need to meet its KPIs or investment criteria. “When we find the startups that actually match these KPIs, it means we believe they will be the market leader in five to seven years. This is what we call the King of the Hill,” Sauvage said.
Explaining his company’s King of the Hill methodology, the president gave as an example Ascend Elements – the battery recycling and upcycling startup and one of its “kings of the hill” that would become a unicorn. “In the deep dive of Ascend Elements, when we looked at them, they were a very small team, but a really amazing technology which allowed for upcycling to recover crucial materials from batteries that were spent,” he said.
“When we did our deep dive, the conviction we built was we need to answer a simple question: Who is the one player that can truly help OEMs reduce battery costs while ensuring supply chain?”
Sauvage said TDK Ventures realized that Ascend Elements, formerly known as Battery Resourcers, had a Unicorn valuation as it could recycle batteries for electric vehicles. Its technology can help countries avoid mining lithium, cobalt, nickel and other materials, and instead reuse them locally, with no need for transportation across the world.
Challenger technologies
The TDK Ventures chief also pointed to the need for a bigger spectrum of technologies to bring better and greener solutions.
“We are getting into a more fragmented world. There is a ray of hope in that. The tension and the friction that it creates enable these entrepreneurs to build really good technologies for a greener planet,” he said.
Ascend Elements is one of these “challenger technologies” backed by TDK Ventures, in addition to Type One Energy and Peak Energy.
Type One Energy is developing a continuous fusion power plant to produce affordable, clean energy while Peak Energy is commercializing sodium-ion battery technology to serve the growing market demand for energy storage.
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