The Covid-19 pandemic has not had a significant effect on TDK Ventures, the strategic investment arm of Japan-headquartered electronics manufacturer TDK, as it was formed with the expectation of an economic slowdown, managing director Nicolas Sauvage told Global Corporate Venturing.
“We did anticipate a downturn when we presented the TDK Ventures project to the board of TDK,” Sauvage said. “Early last year when we were proposing setting up a corporate VC for TDK, I did mention that we expected a downturn, and even though it was nothing like what we could qualify as the black swan event it is today, we did think there would be a downturn at some point.
“This is why we designed our corporate VC activities in a way in which we would be able to continue to work, operate, invest and support our portfolio companies even during a downturn.
“We are not changing our investment pace. We are continually reviewing investment opportunities and are currently looking at three potential investments very seriously which could happen in the next three or four months, so it may be even a bit faster than what we have done so far.”
California-based TDK Ventures moved its staff to a work-from-home model before the California lockdown was mandated, and although the lack of personal contact has the potential to slow investments, it is fortunate in that it had completed due diligence for two of its next three investments, one of which was an investment in medical imaging technology developer Genetesis announced on Tuesday.
Genetesis is the first healthcare technology developer TDK Ventures has backed, but the effect coronavirus is having on the medical environment makes deals in the space trickier in a practical sense, Sauvage had told GCV.
“In this specific instance, where we are being challenged is the final part of the due diligence process where we would be physically talking to hospitals’ emergency room teams to see how they would welcome the product,” he said.
“As you can imagine, this is not the time you want to talk to and distract an ER team. So that is something we are going to have to take into account as a risk – we have not done the due diligence there ourselves – but luckily, we have lead investors that have done the diligence talking to ER teams and are sharing the information with us.”
Although new investments are on the horizon, TDK Ventures is also in close contact with its existing portfolio companies, which include consumer product delivery service Starship Technologies and electric bicycle rental service Wheels, and seeing where they can offer assistance.
“Financially, we are making sure we know when they will need their next round of funding, assisting them in this process, planning for it and reaching out to other investors,” Sauvage said.
“In addition, we are making sure TDK can potentially function as a partner in terms of supplying components or solutions, maybe supplying access to factories or access as a customer.
“That is even more important, because TDK is really a company that wants to be strong in the ecosystem and bring value, so we are making sure our portfolio companies can tap into that.”
As for how that portfolio is positioned, Sauvage is optimistic that Starship’s robotic delivery model and Wheels’ micromobility business can prosper in a coronavirus atmosphere, as can AutoFlightX, which is developing a vertical take-off and landing craft that could hypothetically deliver medicines to the sick without human contact.
“I think micromobility is also going to become stronger post Covid-19 because people will prefer to have the ability to go from point A to B, maybe avoid public transport a bit more than before, without going to the extreme of getting into a car and driving, which also causes so much more pollution and has its own restrictions,” he said.
“We are investing in materials companies like (laser-light technology developer) SLD Laser; we believe that is a segment that is going to have a lot of high potential because they are working on new activities wherein TDK is helping, however I cannot comment on what they are just quite yet.”
Photo of Nicolas Sauvage courtesy of TDK Ventures, Inc.
