TDK Ventures President Nicolas Sauvage on building successful deep tech startups
"There's no doubt in my mind that no one can forecast the future."
“There's no doubt in my mind that no one can forecast the future,” says TDK Ventures President Nicolas Sauvage.
But if you're a deep tech founder building a first-to-market solution that could meaningfully contribute to society and generate a 50x return, he wants to hear from you.
I invited him on the podcast to learn about TDK Ventures’ approach to corporate VC, which uses "backcasting" to identify ideal future tech and then invest in entrepreneurs who are working towards those goals.
Its 37 portfolio companies include startups that make things like flying taxis, batteries from reclaimed materials and technology for nuclear fusion. Investing from two separate funds, Nicolas and his team hunt for startups that fill existing technological gaps.
In this conversation, he laid out TDK Ventures’ investment thesis, his framework for calculating TAM and explained why timing is so critical.
“In deep tech, the first-to-market solution typically gets 90 percent of the margin of the industry. The second one would get 10 percent and then everyone else is in the negative margins,” said Nicolas.
“So you really want to be sure you're first to market. And the way to do that is to partner with the entrepreneurs who are building the future.”
Runtime: 43:31
Episode breakdown
4:50: “The origin story of TDK Ventures was three interactions in classes from a Stanford executive program in 2018.”
7:59: Nicolas explains TDK Ventures’ investment scope.
9:14: “No one can forecast the future,” which is where backcasting comes in.
11:39: “Right now, we deploy through two different funds.”
14:07: Inside TDK Ventures’ deal flow and investment thesis.
16:14: “For any megatrends, we're looking at $10B+ TAM. It could be zero TAM today.”
20:31: How do you calculate TAM for emerging technology?
22:17: When it comes to due diligence, “we are prepared. We know what to look for.”
25:23: Why he’s open to revisiting pitches he rejected once their technology matures.
29:59: Common misconceptions about corporate venture capital.
33:40: “How do we judge when is the right time? That really depends case by case.”
36:09: How TDK supports early-stage deep tech founders with academic backgrounds.
42:06: “I like to see entrepreneurs coming with a superpower; something that they're exceptional at that no one else is.”
Links
Nicolas Sauvage, president, TDK Ventures
Jesper Sorenson, Senior Associate Dean for Academic Affairs, Stanford University Graduate School of Business
Ilya Strebuleav, professor, Stanford University Graduate School of Business
Paul Holland, corporate venture practice managing director, Mach49
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Thanks for listening!
– Walter.