A new venture called Leitmotif has been suffering a silent blitz for the past 16 months, focusing on decarbonisation on roughly 20 startups. Its portfolio includes EV companies, space and battery play, and four fusion startups. However, the company only says that the funds come from “European Industrial Interests.”
Now, Leitmotif has told TechCrunch where the money came from: the Volkswagen Group.
The German automotive giant has committed $300 million to Leitmotif's first fund, and is its only limited partner. Leitmotif has deployed about a third of that so far. At a meeting Tuesday, Volkswagen Group CEO Oliver Bloom said Leitmotif's investments will help reduce the automaker's carbon footprint and develop the company's “internal and external circular economy.”
“Volkswagen culture is a team culture,” he said.
Leitmotif wants to go further, according to Matt Trevithick and Jens Wiese, managing partners at the young company. They hope to spin a succession of funds that will attract more European industrial interest beyond Volkswagen.
It's an ambitious effort. Securing funding for hardware startups, especially those with severe manufacturing components, has been tough in recent years. But Trevithick believes it's the right time to try and invest in these types of companies.
“I think technology has always been a factor in human progress and the US is trying to recharge it,” he told TechCrunch. “I think we're going to be trying to create a lot of technical capabilities in the US over the next few years.
Leitmotif is also building the Transatlantic Fund while the geopolitical environment is tense by the Trump administration.
Despite that confusion, Wiese, who headed M&A, investment advisory and partnerships before launching Leitmotif for Volkswagen Group, said the overarching goal of the new company is to “bridge between European industrial facilities and the US innovation ecosystem.”
Priority: Make money
Trevithick and Wiese said they have top priorities when Volkswagen agrees to invest in the fund.
“First and foremost, this is setting up a successful venture,” Wiese says.
While the Volkswagen Group makes revenue in hundreds of billions of dollars a year, Wiese said making money is still important as it is “a way for the industry to maintain its score.”
The VC firm then said, according to Wiese, it plans to invest in “category-defined companies in areas of interest” and identify “new pockets of innovation” that will benefit the Volkswagen Group.
Wiese said he expects that about a quarter of Leitmotif's portfolio will interact with Volkswagen and its myriad brands over time.
EV truck startup Harbinger is one example. Leitmotif was Harbinger's $100 million Series B, co-led by Leitmotif, in January, and Wiese said the startup discussed collaboration with Volkswagen's trucking division.
Geographically, Leitmotif's investment strategy is structured, with about 70% of its capital being deployed to the US and the other 30% being invested in the EU. The company will maintain offices in both Palo Alto and Munich.
Trevithick said 70% of Leitmotif's global investment in this first fund comes from startups that “solve known issues today” and “are in a market that “follows customers to buy innovation” and is “in a billion-dollar market.”
The other 30% of the fund will focus on what he called “innovative innovations” that will create “billion dollar markets since the 2030s.”
So far, the strategy has led to investments in battery recycling company Redwood Materials, reusable rocket company Stoke Space, and even circular polyester startup Syre. Leitmotif has publicly supported 13 startups so far, but there are even more in its unannounced portfolio.
Leitmotif ultimately has other funds. Trevithick and Wiese said they are particularly focused on robotics and AI. Volkswagen reserves the right to invest in them if they choose, but Leitmotif is independent and for now it is focused on finishing up the first fund.
Timing is everything
The second half of 2023 was perhaps the worst time when recent memory startups locked down large funding rounds, especially those focused on hardware and “deep tech” thanks to high interest rates.
Trevithick said it was the perfect time to start Leitmotif.
“When a strong company separates from a weak company, it's a down market. In the bubble, everyone is funded,” he said.
That slowdown in funding has allowed other companies to reduce risk outside of startups that are already invested in, Trevithick said.
“Everyone has become myopia about their portfolio, so there's less new dollars available to fund the good companies there,” he said. “That's why I think we were interested in a lot of inbound tourism in order to get into rounds that weren't accessible during the bubble era.”
That interest came largely thanks to the background of Wiese and Trevithick.
Wiese spent nearly eight years with the Volkswagen Group, where she managed mergers, acquisitions and investments of German automakers. During this stint at Volkswagen, Wiese developed what he called “a very deep network into the venture community, both in Europe and the US.”
Meanwhile, Trevithick has been a partner at Venrock for 10 years. There he focused on investing in green energy during the original cleantech boom of the early 2010s, and his best profile bet was an early bet for battery maker Atieva, the company that ultimately became Lucid Motors.
According to Trevithick, investing, advise and mentoring companies through subsequent clean, high-tech busts to navigate the uncertainty that currently plagues the industry.
While many companies' “net zero” goals have been hedged or completely abandoned, Trevithick said the clean tech industry “started from a much better position this time.”
Additionally, Trevithick said he believes unpredictability will provide more opportunities for companies like Leitmotif, and that confirms it.
“I think we can all agree that it will be a very unstable environment. It should disproportionately support entrepreneurs, startups and venture capitalists,” he said.
“We are very confident in our portfolio,” Wiese added. “yes, [decarbonization] It's our comprehensive theme. At the same time, we invest in companies that we believe they have a business case for success, regardless of what the theme of the day is. ”
This story was updated with comments from Volkswagen Group CEO Oliver Bloom.