Meet the new VC firm secretly backed by Volkswagen

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 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 informed 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 thus far. 

And Leitmotif, in line with the younger agency’s managing companions Matt Trevithick and Jens Wiese, desires 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 element, has been robust the previous couple of years. However Trevithick believes it’s the suitable 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 america is about to supercharge that,” he informed TechCrunch. “I believe the subsequent a number of years are about to supply a variety of technical capabilities in america 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 – mentioned the overarching purpose 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 mentioned Volkswagen had a prime precedence when it agreed to put money into the fund: generate income. 

“Before everything, that is about organising a profitable enterprise agency,” Wiese mentioned. 

Whereas Volkswagen Group rakes in a whole bunch of billions of {dollars} per 12 months in income, Wiese mentioned making a living remains to be vital partly as a result of it’s “how the trade retains rating.” 

After that, the VC agency mentioned it plans to put money into “class defining firms inside our fields of curiosity,” in line with Wiese, and likewise establish “new pockets of innovation” that would 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 probably be deployed within the U.S., with the opposite 30% being invested within the E.U. The agency will preserve workplaces 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 right this moment’s recognized issues” and exist in “billion greenback plus markets with clients prepared to purchase the innovation.” 

The opposite 30% of the fund will probably be targeted on what he known as “revolutionary innovation” that may 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 to this point, although there are extra in its portfolio that haven’t been introduced. 

Leitmotif will finally produce other funds; Trevithick and Wiese mentioned they’re notably eyeing robotics and AI subsequent. Volkswagen could have the suitable to put money into these if it chooses, however Leitmotif is impartial and, for now, targeted on ending out its first fund. 

Timing is all the things

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 mentioned that made it a good time to start out Leitmotif. 

“It’s in down markets when the robust firms separate from the weak. In a bubble, everybody will get funded,” he mentioned.

That fundraising slowdown precipitated different companies to take fewer dangers outdoors the startups they have been already invested in, Trevithick mentioned.

“There have been much less new {dollars} obtainable to fund good firms that have been there, as a result of everybody acquired myopic about their very own portfolio,” he mentioned. “I believe that’s why we acquired numerous 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 due to 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 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 associate at Venrock for a decade. There, he targeted on making investments in inexperienced power in the course of the authentic clear tech increase within the early 2010s, together with his highest-profile wager being an early one on battery maker Atieva – the corporate that finally turned Lucid Motors. 

Investing, advising, and guiding firms by means of the next clear tech bust was worthwhile expertise for navigating the uncertainty presently plaguing the trade, Trevithick mentioned. 

Whereas many company “web zero” targets are being both hedged or deserted outright, Trevithick mentioned the clear tech trade 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 are able to all agree it’s simply going to be a extremely unstable setting. 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.”