A brand new enterprise agency known 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 advised 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 accomplice; Leitmotif has deployed roughly one third of that to date. 

And Leitmotif, in accordance 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 formidable effort. Securing funding for {hardware} startups, particularly ones with a critical manufacturing part, has been robust the previous few years. However Trevithick believes it’s the fitting time to attempt to spend money on these sorts of corporations. 

“Expertise has all the time been a driver of human progress, and I feel the USA is about to supercharge that,” he advised TechCrunch. “I feel the following 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 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 – stated the overarching aim of the brand new agency is to “create a bridge between the European industrial institution and the US innovation ecosystem.” 

Precedence one: become profitable

Trevithick and Wiese stated Volkswagen had a high precedence when it agreed to spend money on the fund: become profitable. 

“At the start, that is about establishing a profitable enterprise agency,” Wiese stated. 

Whereas Volkswagen Group rakes in lots of of billions of {dollars} per 12 months in income, Wiese stated earning money remains to be essential 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 accordance with Wiese, and in addition determine “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 Series 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 might 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 world investments on this first fund might be made in startups which can 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 might be targeted on what he known as “revolutionary innovation” that can 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 Area, 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 stated they’re significantly eyeing robotics and AI subsequent. Volkswagen can have the fitting 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 thing

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 stated that made it a good time to start out 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 triggered 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 acquired myopic about their very own portfolio,” he stated. “I feel that’s why we acquired plenty 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 due to 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 known 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 accomplice at Venrock for a decade. There, he targeted on making investments in inexperienced power in the course of the unique clear tech growth within the early 2010s, together with his highest-profile guess being an early one on battery maker Atieva – the corporate that ultimately turned Lucid Motors. 

Investing, advising, and guiding corporations by means of the following clear tech bust was helpful expertise for navigating the uncertainty at present plaguing the business, Trevithick stated. 

Whereas many company “internet zero” objectives 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 unstable 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.”