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 centered on decarbonization. Its portfolio contains EV firms, house 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 associate; Leitmotif has deployed roughly one third of that to this point.
And Leitmotif, in keeping with 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 right this moment.)
It’s an bold effort. Securing funding for {hardware} startups, particularly ones with a severe manufacturing part, has been powerful the previous couple of years. However Trevithick believes it’s the correct time to attempt to put money into these sorts of firms.
“Know-how has at all times been a driver of human progress, and I believe the US is about to supercharge that,” he instructed TechCrunch. “I believe the subsequent a number of years are about to provide quite a lot of technical capabilities in the US that the remainder of the world will marvel at.”
Leitmotif can be constructing a transatlantic fund whereas the geopolitical atmosphere 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: make cash
Trevithick and Wiese mentioned Volkswagen had a high precedence when it agreed to put money into the fund: make cash.
“In the beginning, that is about establishing a profitable enterprise agency,” Wiese mentioned.
Whereas Volkswagen Group rakes in lots of of billions of {dollars} per yr in income, Wiese mentioned getting cash continues to be essential partly as a result of it’s “how the business retains rating.”
After that, the VC agency mentioned it plans to put money into “class defining firms inside our fields of curiosity,” in keeping with Wiese, and likewise determine “new pockets of innovation” that might 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 preserve places of work in each Palo Alto and in Munich.
Trevithick mentioned 70% of Leitmotif’s world investments on this first fund will likely be made in startups which might be “fixing right this moment’s recognized issues” and exist in “billion greenback plus markets with prospects prepared to purchase the innovation.”
The opposite 30% of the fund will likely be centered on what he referred to as “revolutionary innovation” that can create “billion greenback markets within the 2030s and past.”
To date, 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 thus far, 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 can have the correct to put money into these if it chooses, however Leitmotif is impartial and, for now, centered 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 massive funding rounds, particularly ones centered on {hardware} or “deep tech,” because of 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 precipitated different companies to take fewer dangers exterior the startups they have been already invested in, Trevithick mentioned.
“There have been much less new {dollars} out there to fund good firms that have been there, as a result of everybody obtained myopic about their very own portfolio,” he mentioned. “I believe that’s why we obtained lots of inbound curiosity to take part in rounds that, within the bubble time, perhaps we wouldn’t have had entry to.”
That curiosity got here largely because of 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 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 associate at Venrock for a decade. There, he centered on making investments in inexperienced vitality through the unique clear tech increase within the early 2010s, along with his highest-profile guess being an early one on battery maker Atieva – the corporate that ultimately grew to become Lucid Motors.
Investing, advising, and guiding firms by way of the next clear tech bust was beneficial expertise for navigating the uncertainty at the moment plaguing the business, Trevithick mentioned.
Whereas many company “internet zero” objectives are being both hedged or deserted outright, Trevithick mentioned the clear tech business 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 believe we will all agree it’s simply going to be a extremely unstable atmosphere. 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 identical time, we put money into 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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