Adam Torres and Nicolas Sauvage discuss challenger technologies.
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Show Notes:
In what ways can collaboration between corporations, founders and startups accelerate progress toward sustainability goals? In this episode, Adam Torres and Nicolas Sauvage, President at TDK Ventures, explore “challenger technologies” and their significance in shaping a sustainable future.
About Nicolas Sauvage
Nicolas Sauvage is the President of TDK Ventures. Nicolas Sauvage is committed to invest and serve entrepreneurs – the ultimate Impact Scalers – to build innovative and meaningful solutions in Digital, Energy & Environmental Transformations that will bring positive impact to society and the planet. Nicolas believes in the value of focusing on what really matters in one’s life and removing the noise around us as much as possible; he created the concept of the “8 words” to capture in just 8 words what matters the most to someone, and prioritize their life’s choices and activities, every day. His 8 words starts with his wife: “Sheila first. Scaling Impact Scalers. Patience and Impatience.” and are engraved on his iPad.Nicolas is an alumnus of the Stanford GSB, INSEAD, London Business School, and microelectronics ISEN school.
About TDK Ventures
TDK Ventures is a Corporate VC firm investing globally in early-stage hard-tech projects – serving entrepreneurs, the ultimate Impact Scalers, who are creating a new era of sustainability and social value.
Full Unedited Transcript
Hey, I’d like to welcome you to another episode of Mission Matters. My name is Adam Torres, and if you’d like to apply to be a guest in the show, just head on over to missionmatters. com and click on be our guest to apply. All right, so today’s guest is Nikola Sauvedge, and he is the president over at TDK Ventures.
Nikola, welcome to the show. Thank you for having me today. All right. So we got a lot to talk about today. I’m excited to have you on the show. We’re going to get into, of course, TDK ventures and the work you’re doing there. I want to talk about challenger technologies. I want to talk about collaboration between corporation founders and startups and how to accelerate.
Progress towards sustainability goals. So we got a whole lot to cover here, I guess , just to get us started though, Nicola, maybe tell us a little bit more about , how you got into business, like, where did this start for you? Thank you. So TDK Ventures is a corporate VC of TDK. I think many in your audience would remember TDK as an audio cassette.
As you can imagine, TDK has moved on and I started the corporate VC For TDK back in 2019. So five years ago, and what got me excited about the journey is to help entrepreneurs, and I’m going to introduce a term, which is on our website. And in every, every conversation we have, which is. We call the entrepreneurs, the impact scalers.
And the reason we do that is because their mission, their life’s mission is to bring positive impact to the world and to scale it. And we see it as our mission to help them scale and to bring even more impact more quickly with less risk. So sometimes I talk about VC or corporate VCs. If it’s done well, we are the impact scalers behind the impact scalers or impact scalers squared.
Could you talk a little bit more about that concept of corporate VCs for those in the audience that maybe aren’t familiar with that term or just haven’t quite gone that route? Like, can you talk a little bit more about that? Just the concept. Absolutely. So most people would know about VCs, which is firms that invest capital from limited partners in startups, typically minority equity with the objective to return much more money to the limited partners.
So it’s a financial goal, a corporate VC, in addition to a financial goal. Most times is to also break strategic value to the mother ship, and the mother ship is typically one company, but it could be multiple, but typically one company and to help the corporations, maybe with an ecosystem goal, which is to work with more partners or potential customers or strategic in terms of exploration, which is about development.
Where should the the firm behind, decide where to go and where not to go? And if you think about strategy, it’s really simple. It’s about deciding What not to do and where to allocate your resources. And some firms decides to go into a new place with a big gambit. It’s like a big acquisition.
And then they discover maybe it was not the best place to, put your resources, a corporate VC is a bit like this tiny helicopter that flies between peaks in a cloudy day and can identify which peak is really good and welcoming. The corporation should consider going there and which ones are hostile and very tough and definitively not the place for the corporation.
. , how can this collaboration work at times? And obviously it’s going to be different between, , companies acquisition, different things. Of course, there’s a ton of different setups, , but like, how can that collaboration work between the, the corporate the corporate entity , and the founders and just the whole structure, like, how can that work?
Actually, the key word is collaboration. So I’m glad you had this question. it’s really is designed for the strategic goal, of course, of the corporations to know where to go and where not to go. And if you want to achieve that goal a, even from a selfish point of view, You want to build intimacy with the people building the future that you want to discover and the entrepreneurs are those who are building the future.
so if you find a way to collaborate with these entrepreneurs who are building the future, you’re more likely to learn about what that future looks like and whether you want to participate in it. And at TDK Ventures, we actually have a term which we call equal win. And that’s important because in the world of.
Entrepreneurs and startups, sometimes it could feel like David and Goliath. And when people say win win, typically it could look like a very small win for the startup and a very big win for the corporation. And it’s kind of short sighted because you end up with a situation where two years down the line, Whoever got a small win may move on and whoever thought they had a big win has nothing.
And so we spend a lot of time at TDK Ventures to really focus on engagement that looks like, and we believe will be equal win, where both parties really get value. And in reality, these equal win engagements are the ones sustainable over time. They are the one that helps build intimacy between the parties.
But more importantly, back to your question, That’s how collaboration really starts to be very fruitful. Yeah, that’s interesting. And I feel like it’s just, it’s a new, it’s definitely a new slant. Like that concept of trying to create true win wins. And it seems like, and correct me if I’m wrong, but like with that type of even design, like the aim and the goal is for a longer term, , partnerships and longer term wins.
Like, so that you can maybe have more impact long term, not just in the companies and what you’re doing, but maybe even the technologies that are being developed. Right? Absolutely. And this is one where I’m very blessed at TDK, our mothership. One of the core values is contribution to society.
And it’s a firm that’s nearly 90 years old. And one of our core values, so we have four core values at TDK Ventures, is also contribution to society. , and contribution to society doesn’t happen very quickly. It’s something that needs to be sustained over time, that needs high level of collaboration with a full ecosystem.
And if I look at TDK Ventures, we’ve invested in 37 startups. 37 portfolio companies, and they range from potential customers of TDK, potential partners of TDK, potential suppliers to TDK. So you can see this is really the full range of ecosystem. Yeah, what stage are you investing?
, is this early stage or like , what stage? We really like to invest very early. So we’ve done formation of company recently. We do seed series A. So if I look at seed and series A, that’s a majority of our investments. And once you include series B, We have like more than 90 percent of our investments.
the reason is simple is for TDK Ventures. Our mission is a mission of exploration. We want to discover the future, which is basically new market, new application, new use case, new business model, where TDK is not yet in. But TDK has already announced in their annual reports. This is one of these mega trends they want to.
Engage and so our ability to work with entrepreneurs very early stage when they are just defining what the future could look like. Wow. I heard yesterday a really good terminology, which I think your audience will really like. We are not in the business of forecasting. We’re in the business of backcasting, which means that we’re trying to define what we think the future will look like, what the ideal future would look like.
And we are trying to go backwards from that and identify the entrepreneurs building that future versus trying to guess what the future could look like. Hmm. That’s amazing. That sounds, I’ll tell you, Nicola, it sounds kind of fun, like what you’re doing. It sounds fun, like going after these technologies, working with early stage, like trying to envision what’s next and trying to create,, eco, that ecosystem to continue to help the mothership, right?
TDK overall, like, sounds fun. It’s, it’s, it’s amazingly rewarding. You keep learning every day, but it’s also extremely hard work and it requires a lot of discipline makes the job really satisfying because it’s actually really, really hard to look at so many startups, so many entrepreneurs.
And the reality of the job is. A lot of times you have to say no to amazing projects. We have looked at more than 7, 000 startups to date. We only invested in 37. So you can see that many, many times there are projects and actually we don’t call them deals, which I think is something very specific.
We don’t call them deals because that feels transactional. We call them projects because they are the entrepreneurs project life projects. And sometimes we see projects we really, really love. We love what they are doing and we just don’t invest because it doesn’t meet all our investment criteria. Now, what is nice about TDK Ventures and some other corporate VCs is sometimes, even if we don’t invest, we still introduce a startup and these entrepreneurs to the TDK teams because there might actually be still collaboration.
Even when we do not invest. Oh, that makes a lot of sense, especially to bring them in the ecosystem. Otherwise, because who knows, especially if you’re looking for new things that they can supply, right? So either way, or that you can consume that value. So yeah, that’s a, that’s great. So you’re really also, we haven’t really used this word much.
We’ve used the word collaboration, but it sounds to me also like relationships is an important part of this, right? Absolutely. So in TDK Ventures, we have, of course, the investment team, but we also have a platform team composed of the engagement team and scaling team. And the engagement team is all about bringing value to entrepreneurs, whether we invested in them or not, from TDK and the TDK group companies.
And even inside the engagement team, we have actually two separate teams. They wake up in the morning with very different goals. One is a portfolio program Management team, and they are in charge of our portfolio companies, making sure they are as successful as possible, and we really bring what we call TDK goodness, but we also have the startup liaison function in that engagement team, and they are focused on helping startups we don’t invest in.
And that way we don’t have this kind of resources conflict between those who invested and those we did not invest. We have two teams that are very focused to bring maximum values to the entrepreneurs. And then the scaling team is actually an interesting concept, which is all about bringing value to our portfolio companies, which is not related to TDK.
So for example, it could be about non dilutive financing. It could be about HR. Human resources blueprint. It could be helping them with recruitment or marketing because like I mentioned earlier, most of our investments are very, very early startups. We invested, for example, in two time part time professors.
We invested in a company in Boston, which was 10 PhDs. They’ve never done marketing. But it doesn’t take a long time to explain to them with our marketing principle. You know, this is when you should go out of stealth mode. That’s how you should write a press release. That’s how you could negotiate with a peer firm to get the right value.
And all of that are little helps along the way that our team can bring to them. Yeah, that makes total sense. And let’s go, take that from the maybe a little bit deeper. You mentioned that the types of individuals that you’re investing in. So we talked just a little bit about the concept of the technologies.
what do you look for in a founder or founders , that makes you want to lean in and consider it more like, what are you looking for in a partner there? We look for people who have a superpower, something they are exceptional at that others are not, and that typically comes with insights into the future.
Again, this concept of backcasting versus forecasting, they have a strong conviction of what the future looks like, and they can see what’s missing today in the world. To make that future possible. And that superpower could come from first principle thinking. It could come from a long experience in a given industry.
It could come from a network effect that they have, but that superpower is what makes us believe that they can succeed, where others would never be able to. Yeah, let’s talk about the investor side of things. Like , what benefits or what do you see from the investor side of things in these projects?
So, well, first it’s extremely rewarding to work with entrepreneurs that wants to contribute to society, to a greener planet. And so for us, we keep learning. And if you think about. VC or corporate VC, we end up meeting so many entrepreneurs who are building the future. And that makes us very quickly, very knowledgeable about what the future could look like.
So I would say that the biggest benefit at least for a corporate VC is to learn about a space that is maybe Not even a market or a tiny market. And we get a sense of what type of technology, what type of business model, what type of approaches is more likely to work than not. And then back to the superpower.
But this time from the corporate VC point of view, we look at what our superpower coming from TDK could bring value to our portfolio companies. And when we met, managed to create this superpower to our portfolio companies, or even to other startups. It feels like magic. It feels like we have finally enabled that equal win, which helps these entrepreneurs that we care deeply about to be even more successful, more quickly.
Yeah. And you have a super unique vantage point, like just even , what you’re out there trying to do day in and day out. And then, you know, whittling down or going from, you know, over 7, 000 companies down to, you know, 30 something, as you mentioned that actually got investments.
So I’m curious sitting from your desk , what trends are you seeing in technology or otherwise that like, what gets you excited? What gets you out of bed in the morning? Like excited to go see what the future is going to be like. So, of course, one feature that we do want to back cast is really about a greener planet.
So climate tech green tech, anything you want to call it. And so we’re looking at what are the technologies today that are not yet with positive unit economics, but which could bring really a better range of tools for us to have a greener planet. And if you think about today, we have three.
Technologies that are really good with very, very good positive unit economics, which is solar, wind, lithium ion battery for energy storage and all the other technologies need help to get to scale and therefore to get to positive unit economics and we see venture capital as Our mission to be able to identify this technology that could become massive in the future With really good unit economics wants a scan and if you think about venture capital It’s about investing in companies before they are profitable and they can sell But we believe in their future.
So i’ll give you the The most meaningful one for me at least is type one energy, which is about nuclear fusion And fusion is one of these green Continuous type of source of energy that is safe. So it’s very different from nuclear fission, which has, of course, is advantages, but also very big challenges.
Nuclear fusion, on the other hand, is extremely complex technology. It will take some time to get it right. But once we get it right, people will look back saying, Why did we not do nuclear fusion faster? I’m actually convinced that society in 100 years from now will be like, why did we wait so long to develop nuclear fusion?
Yeah. But that’s one example. Another example. And so we call them challenger technologies. Because. They need to challenge climate tech and climate in a positive way by scaling, and the intent here is to invest in other technologies that once the scale becomes profitable and can really add to the range of just solar, wind and lithium ion batteries and storage.
So one of the company we invested I mentioned at formation is Peak Energy, which is doing sodium ion battery storage for electrical grid. Thank you for your time. And in this case, it’s even more meaningful because it requires fewer materials which have potential supply chain issues in the future, especially as geopolitics become more and more complicated.
And so when we invested in this company, we could see a future where we don’t need as much of the materials. As we use today, we’ve also invested in companies that recycle this material. So we’ve invested in ascent elements, which is doing all the lithium ion battery recycling, like coming from your cars when it gets too old, but upcycling it to directly cast materials, which is this key ingredient to create a battery again.
Yeah, this is, this is good stuff Nicola. I like it. I’m happy to bring this , to my audience. And when I think about, a company like TDK, , obviously going in this direction and thinking of, and , that sustainability component of this, I mean, it just makes me feel better because we’re, we’re all in this planet together, like, right.
So it’s the point of seeing what we can do to impact the future. Of this planet and then still, you know, make money and still come at it from a business point of view and still, , have some wins there too. Like, I think it’s just great. It’s, it’s creating some good win win scenarios., and then the, also the add in the layer of what you’re trying to do, creating the longer term win win partnership between the founders and otherwise.
I think it’s great. Yeah, the equal win. I think that I’m hoping that more and more people think about equal win because this is a sustainability aspect of any collaboration and engagements, especially when you really have a positive mission. You want to bring positive change to the world. Yeah, I get that from you and I get that from the description of the company and the work you’re doing.
So Nicola, first off, I just want to say it’s been a lot of fun. I learned a lot from you being on the show, so thank you for coming on. I’m sure that our audience did as well. If somebody wants to continue to follow the TDK ventures journey or connect how do they do that? Well, to follow us, the best way is to go into our LinkedIn account, TDK Ventures, but to reach out to us, so if one of the audience is an entrepreneur that wants to change the world and bring positive impact, whether it’s material science, robotics, industrial, robotics, climate tech, clean tech, please do reach out to us.
At tdk ventures. com and we are going to have a form where you can just submit your ideas and we will come back to you. Amazing and for everybody listening just so you know We’ll put those links in the show notes so that you can just click on them and head right on over and Speaking to the audience if this is your first time with us and you haven’t hit the subscribe button yet I welcome you Hit that subscribe button.
This is a daily show each and every day. We’re bringing you new entrepreneurs, new visionaries, new thought leaders, and we don’t want you to miss a thing. So again, hit that subscribe button. This is a daily show and Nicola again, thank you so much for coming on and make it time for us. No, thank you.
Adam, this was great.