TDK launches $50 million corporate venture fund for material science technologies

TDK announced that it has established TDK Ventures as a $50 million corporate venture capital fund to invest in early-stage startups in material science, energy and power, and related areas, such as semiconductors.

These kinds of hardware companies are typically underrepresented in venture capital investments, which is why the company is seeking to bolster the field by applying its 85 years of experience to commercializing new technologies.

Tokyo-based TDK is a big player in magnetic and electronic materials and one of the biggest makers of batteries. Nicolas Sauvage, who brings more than 20 years of industry experience, will serve as managing director of TDK Ventures.

“Our strategy is really about digital transformation and energy transformation,” said Sauvage, in an interview with VentureBeat. “And so the intention of adding TDK Ventures as a corporate venture arm is to embrace the digital energy transformation. We’re looking at the startups that have difficulties getting funded in technology, especially around fundamental material science.”

The new fund will focus on but not be limited to magnetics, micro-electro-mechanical systems (MEMS), piezoelectrics, dielectrics, semiconductors, organic materials, and neuro-electricals. TDK Ventures expects to identify and explore new ideas and technologies, fund and support promising companies, and provide access to markets where TDK operates.

“We’re really going to be focused on the startups that we believe will bring the next breakthrough and really help them become the next big success,” Sauvage said.

Startups will be able to leverage TDK’s scale and reach to access potential customers, channels, a global ecosystem, industry connections, market knowledge, and operating expertise, as well as go-to-market/branding mentorship. In return, TDK will gain early insights into new technologies, allowing the leading global electronics company to enhance its technology roadmap and make forays into new markets and segments.

“The investments made by TDK Ventures will bring new, powerful, transformative business opportunities to TDK,” said TDK CEO Shigenao Ishiguro in a statement. “With TDK Ventures, TDK will continue to expand the marketplace and deliver sustainable growth into our future.”

The fund aims to propel the digital and energy transformations of segments such as health and wellness, next-generation transportation, robotics and industrial, mixed reality, and the wider IoT markets. To accomplish this, TDK plans to hire top talent with experience and investment capability related to CVC activities to collaborate with startups globally.

TDK has more than 105,000 employees, and it posted sales in fiscal 2019 of $12.5 billion. It makes electronic devices such as ceramic and aluminum capacitors, magnetic and piezo devices, temperature and pressure sensors, MEMS sensors, batteries, and more. Its brands include TDK, Chirp, Epcos, InvenSense, Micronas, Tronics, and TDK-Lambda.

Paul Holland, consulting general partner at TDK Ventures and a general partner at Foundation Capital, will collaborate with TDK in the search for good startups. Holland and Sauvage met about nine months ago at a Stanford University executive event.

“When I think about what I see happening with TDK now, I think of two things: the rise of hardware technology and the Valley returning to its roots in semiconductors, strategic materials, automation, advanced manufacturing, and robotics. The higher-level manifestations of this are self-driving cars, robotics, advanced automation systems, and things like that. I find this fascinating because I have always been in love with hard tech,” said Sauvage.

He likened the investment strategy to mountain climbing. The aim isn’t just to climb to the top of a mountain faster than rivals; it’s to find new mountains to explore, or, in this case, new markets.

“Exploration is to take a helicopter and go to a different mountain, but it’s not easy because it’s cloudy and you’re not sure which mountain is going to be the highest for you,” Sauvage said. “TDK is really good at exploitation. We moved to batteries and to sensors. This is about creating a new tool in our arsenal that enables us to go faster into the new space.”

Each investment will range from roughly $250,000 to $2.5 million. Sauvage said TDK will help commercialize startups but it is unlikely to acquire them.

The company’s first office will be in San Jose, California. Sauvage said he and his partners have studied a lot of corporate venture arms, looking at what works and what doesn’t.

“I’ve been amazed at how quickly this has come about, in just nine months, given the stereotype of slow-moving Japanese technology companies,” Holland said. “They act like a startup and believe in reinvention. They believe in disruption.

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