TDK Ventures identifies Israel's GenCell as a 'holy grail' for climatech
TDK Ventures identifies Israel's GenCell as a 'holy grail' for climatech
The corporate VC invests in early-stage startups that “unlock an attractive and sustainable future for the world”
A core mission of TDK Ventures and its investment strategy is exploration. The technology-focused venture fund, which operates a corporate VC arm of the electronic components company TDK, seeks out what it calls ‘the king of the hill’ in specific industries that it believes will become market leaders in its field over 5-7 years. Following long stages of research and exploration, it believes it found its king in the production of green ammonia, considered the "fuel of the future", located right in the heart of Startup Nation.
The firm has invested an undisclosed sum in GenCell, an Israeli startup that offers unique fuel cell solutions that create clean off-grid and backup power. While the amount of its investment could not be revealed, TDK Ventures president Nicolas Sauvage confirmed that the investment took place as part of the firm’s Fund I, which invested no more than $5 million in companies. Even though the company has already raised an impressive $122.84 million, it is an opportunity for TDK Ventures to enter the space at the early stage of the company’s solution lifecycle to help humanity, rather than the early stage of the company itself.
“When we meet with entrepreneurs from Israel, it already resonates very quickly that they come with a solution that helps with a greener planet because typically they already think about global impact,” explained Sauvage when talking to CTech. “What we loved about GenCell was that it is very technical. They really have developed world-class solutions, and they are global from the outset. They identified the opportunity to deploy their solution on a worldwide basis.”
Sauvage shares that TDK Ventures does “passion-driven” investments in areas it believes will change the world for the better. Following its exploration into a specific area within climatech solutions, it chose Israel’s GenCell to represent its efforts in the battery space. “We invested in GenCell because we believe they are the king of the hill - no one can do what they do the way they do it,” he said.
TDK is a leading electronic components company operating more than 250 manufacturing, R&D, and sales sites in over 30 countries worldwide. In fiscal year 2023, TDK posted total sales of $16.1 billion and employs approximately 103,000 people worldwide. Its hope is that when it invests in a company via its corporate venture arm, it becomes part of the journey and invests in the ‘project’ as well as any particular company or entrepreneur. While it remains agnostic to the regions it invests in, GenCell represents the first time the firm has identified Israel as the regional home to the ‘king’ of a space. According to Sauvage, it likely won’t be the last.
“The entrepreneurial spirit is combined with very deep technical depths,” he says of Israeli founders. “Part of it is because of the military angle, but it brings a lot of high-quality entrepreneurs with high-quality technical solutions. It is also a small country, which has the advantage of thinking globally from the start. When we meet entrepreneurs from Israel they are thinking globally already - and that has huge attractiveness when you are a VC. You're thinking about projects that could have the potential to impact the world.”
TDK Ventures has a triple bottom line: the first is the hope to receive a 50x return in its Fund, the second is the strategic value it can bring to a company once it invests in them, and the third is about the contribution the investments have to society. “If you think about entrepreneurs that think globally from the outset, it gives us the opportunities to have really good financial returns but also an impact on society. The positive impact on society can be huge….That’s Israel, and GenCell embodies that.”
Today, GenCell manufactures, sells, and services fuel-cell-based power solutions. The company is led by Co-Founders Rami Reshef (CEO), Gil Shavit (CBDO), and Gennadi Finkelshtain (CTO). TDK Ventures has called its green hydrogen solution “the holy grail” and intends to remain an active investor as the company continues to grow and provide its cleantech solutions around the world.
As for Israel, TDK Ventures believes it will be back sooner rather than later to identify another king within Startup Nation for its focus on cleantech through its new fund, EX1, focused on energy transformation. It is currently undergoing an exploration related to sustainable aviation fuel and the electrification of airplanes, and the firm has already arranged an event in Israel again for April 2024. “I am bullish about Israel because of its amazing technical entrepreneurs. And in cleantech, I know there are many. I will be very surprised if we don't find the king of the hill in Israel,” he said.
