Big impact

Tech startups working to create the impossible often feel alone. Free from expectations, yet surrounded by isolation and uncertainty, these pioneers walk a fine and shadowy line between finding a brilliant solution and coming up empty.

An established problem-solver itself, TDK Corporation recognized this often overlooked corner of the innovation scene when it established TDK Ventures, a venture capital firm dedicated to impact-scaling entrepreneurs.

It’s not easy to be in the business of taking leaps of faith, but TDK Ventures Founder and President Nicolas Sauvage says it’s all about patience.

“I think you need to combine patience and impatience,” he tells The CEO Magazine.

“It’s easier to promise than to deliver, but patience reflects a deeper sense of purpose. It’s doing the right thing and taking the time to make sure you deliver, and when you think about early-stage investment, it takes a long time for our portfolio companies to build into market leaders, so patience is a virtue.”

A mission to explore

Itself an innovator since 1935, TDK Ventures recognizes bold new ideas when it sees them. The company has made material science its focus to raise the bar for the industry, Sauvage explains.

“When I talk about raising the bar, it’s ultimately about the entrepreneurs,” he says.

“When I was growing up in France, I’d look to my father, who worked very hard and was constantly learning. From him I learned the power of curiosity and staying relevant, and he’s a big part of why I do what I do.”

From cleantech and mobility to energy and Industry 5.0, TDK Ventures is concentrating on areas Sauvage says have the greatest potential to improve society and contribute to a healthy planet.

“I proposed this initiative to TDK as a mission of exploration, one that helps TDK understand where to go and where not to go. That’s the essence of strategy,” he says.

“We’re helping entrepreneurs to succeed and reducing their risk, but at the same time we’re helping our mothership become more successful.”

On the way up

Despite that, Sauvage is hesitant to brand TDK Ventures a success at this point in time.

“That might be shocking to say, but to me success means helping create billion-dollar annual revenue businesses to TDK,” he says.

“We’re getting there, and we have clear indications we can reach that point. I’m super proud of my team, and we’re off to a very promising start by every metric.”

The TDK Ventures team keeps its finger on the pulse through a series of effective KPIs that chart the value provided to entrepreneurs, the value to TDK and its companies, and the value to the ecosystem.

“For each of them there’s a threshold target and a stretch goal,” Sauvage says.

“We determine whether an opportunity is specific, measurable, accountable, achievable, ambitious, relevant and timely – that’s my play on SMART – and we derive our KPIs from there. It means we’re very strongly aligned as a team on what we want to achieve and how.”

Patience is key

The investment team is given enough time to deeply explore topics they are passionate about before presenting them as viable investment opportunities.

“They need to learn as much as possible, so they’ll have as much as nine months to explore,” he says. “Once they’ve determined a company could be ‘king of the hill’ or a market leader in five-to-seven years, the team will discuss – but investment decisions are driven by conviction, not consensus.”

Sometimes, three out of four boxes are ticked and the opportunity is relinquished; a sobering experience for those in the team convinced of its potential.

“Ultimately, if we haven’t found the ‘king of the hill’ or a future market leader, we have to move on. But we can move extremely fast, thanks to the work we do upfront.”

Sauvage says TDK Ventures has been well-optimized to be able to make quality, considered decisions in the face of high uncertainty, even when those decisions won’t pay off immediately.

“I often say that overnight success takes 10 years,” he says. “That’s why we’re so patient; we know what we do will take a long time to bring dividends, and on top of that there’s this urgency to find solutions we need today.

“Sometimes corporate venture capital firms say they have two customers: the entrepreneurs and the mothership. That’s a problem, because you’re never really sure which one takes priority. We see TDK as a shareholder, but the entrepreneur is where everything starts.”