DTM E60. Foraying into VC Industry and Enabling Deep Tech Startups in India- Vasan, TDK Ventures

The yalways call them as we always call the start of the that we must ask King of the hill which comes we look for three different things one is the strategic fit and synergies how good this company is strategically fit for 3dk and what all the synergies we bring second criteria is the financial returns if I invest in this company how big it can be and the third is the societal impact how good like you know how it can create a big impact if this start up becomes big and like you know which is the maturity what the what is the impact that it can create for the society so the intersection of these three circles lies the King of the hill Hi welcome to deep tech musings podcast I'm a host from the Geath on the show with me today is Vasant who is currently part of the investment team at tdk ventures where he's focusing on supporting deep tech startups in India in sectors like energy climate materials health and mobility prior to tdk he co-founded a deep tech startup in the field of robotics additive manufacturing is passionate for startups business and finance Vasant welcome to the show how are you doing fine thanks from no jith thanks for the nice introduction so let's start off with some quick overview of what tdk ventures is in terms of globally as well as in from India perspective can you share some inputs there yeah sure so tdk ventures is the venture capital of tdk corporation a Japanese multinational company and they have more than 85 years of history and their opinion is an electronics energy and digital transformation and they journey like no tdk ventures as a journey begin and like you know 2018 when Nicolas Savash the president of tdk ventures he attended a Stanford executive program during this program he had a session on open innovation there he got the idea of corporate venture capital so the reason being corporates are very good at exploiting existing technology but to explore new transformative areas you need to have a corporate venture capital to go and explore these new areas that's when he thought tdk needed a corporate venture capital so that's it at a thought of tdk ventures during the next few weeks he attended another lecture by Elias Swabli he's a famous professor of venture capital he listed out the reasons of how cvc can fail so that really better realization and Nicola okay I need to avoid this pitfalls and have a clear strategy and like no day take care of all this pitfalls and have a clear strategy to make sure the cvc is successful so he read to he sought advice from industry veterans to refine the strategy and he proposed idea to tdk corporation and in one year it was in August 2018 in one year tdk ventures was born we recently celebrated the 5/5th year anniversary so this is the founding story of tdk ventures if you take our investment thesis it really involves our own scaling impactful solutions that contribute to sustainable future so we are focused on early stage tech startups in sectors like next-gen materials energy and clean tech connectivity computing industrial mobility and health tech and what differentiates us it's our mission is entrepreneurs first approach we see entrepreneurs as the ultimate impact scalers who can drive significant societal change and we want to be the impact scalers behind those impact scalers so our investment yeah so so far in this three years we have launched three funds with the total of 350 million asset center management that is one portfolio companies two unicorns and we had four merger and acquisition and one of them went for IPO so this is in short a global snapshot of tdk ventures that's great and good to see how recent entrance in this VC industry are making impact and understand while understanding a helping and especially in a complex in industry like that of deep tech yeah so in terms of this three funds that you mentioned these are global funds or these have some specific focus from geography or some other aspects so yeah the first two funds are like an agnostic it's like you know it's global the third fund the fund EX1 which is like in a specific to North America and Europe it's a EX1 and it has also has a not only geographic mandate it has a like a thematic energy transformation got it understood and so in and then from the global perspective like how what led tdk ventures to have an India establishment sure I can tell about why we started in India so like you know many like many deep tech vases we started observing the trend like you know globally where exactly the next big thing is and we feel there's a great potential in India there's a current of deep tech research that was happening and there are a lot of companies coming around in space and other areas so we felt the time is ripe this is the right time to come to India and be part of this deep tech revolution because like you know if you go later then the revolution might have happened so you want to catch this entrepreneur's early and the right this deep tech wave in India so that's what we started so that's we have been mine in 2023 we started our deep tech innovation hub belongs to our first innovation hub in Bangalore the hub is not just a physical space but no a vibrant center for developing and scaling breakthrough technologies it's a space where we have like method we invite like mind that deep tech vases are actually it accelerators to share the space and out of the Indian deep tech story got it now in terms of the impact that we have had till now you mentioned I think global globally we had two unicorns and one IPO startup already so maybe we can start from there and then I'd like to also understand that in India one is like that we're doing with the startup so can you highlight first about the three unicorns and the one which went IPO what what is their category what do they do and what was TDK Ventures value edition there yeah definitely so there are three unicorns GROC which is a A and a chip GROC the second one is Silicon Box which is a semiconductor based company and the third is Ascent Elements so Ascent Elements is a recycling battery recycling it's about battery recycling so these are the three unicorns we had never put for you so our role is like you know we are in a TDK as a corporate venture capital we just don't invest a capital we are a innovation partner so before even Jenny came for example for GROC we invested in 2019 in GROC before even Jenny became a buzzword so we catch innovation and like you know have the D Arc technology arc ELEA and invest in these companies and it's not only capital we have a global customer base and we have technology expertise so how do we bring that expertise how can we be a innovation partner so these are the things we do with these companies there are a lot of technical engagements and then going to the next stage building a dreams indicate which is like not only investment not only bringing technical expertise but how this technology arc is going to go in the future so for that who will be the next great partner in the next stage so we map out the space trying to connect them with the strategic venture capitalists technology partners customers so these are all the things we do for all these companies I cannot go into specifics but this is a general thing that we do with all these companies and I said that sounds quite interesting and especially as you mentioned GROC so we all know the behemoth it is turning it out into so great to know that EDK you know I identified that an early stage yeah partnered and then led to their development so coming to the India part now so what has been the DK Ventures impact over the last one year can you highlight few startups that you have been working with India and more around that yeah so yeah we are truly like in this one and a half year we are fortunate to work with some remarkable deep tech startups in India so we have three investments in India one is infinite uptime, Exponent Energy and Fussell so let me go one by one infinite uptime also first investment in India their industry 5.0 focus startup they transform how industry plans operate they have worth a driven machine learning algorithm which is physics based on real-time plant diagnostics so they They help in being in process industries like cement, oil and gas and chemicals, don't time like every minute counts. A single minute of downtime can cost you hundreds of those and so on. So that's why they want to make them zero don't time. They want to have it as an infinite of time. Since our investment two years ago, they have grown at an impressive rate, like doubling year over year. We have supported them in their technical development, build investors in decades and help them like, you know, expand, or you're aggressively like, you can expand into different regions. So this is our value to them and exponent energy. They are a standout company in the full stack charging system. So where you can charge EV batteries from zero to 100, you know, like now, the quit commerce, it has to like in a faster delivery, the same trade delivery, people cannot wait. So in the same case, so lot of cargo, you three wheeler cargo are doing the last mile logistics. So they cannot wait, but at the same time, there's a need to decarbonize them. So you have a, if you have a fast charging, they just like, you know, do it in 15 minutes. You don't need to wait. You cannot like in a charge over these vehicles. So they just do it in 15 minutes. So they revolutionizing the last mile logistics year. So this is more about batteries, batteries and other power system components, which is a bread and butter for 3DK. So that's a great synergy there and we help them, you know, both on technical and technical engagement and market expansion. Fasal. Fasal is a precision agriculture, precision tech agriculture company. So what they do is they leverage the RTI AI crop sciences and IOT census so that they can provide crop specific intelligence that can help farmers optimize resource and boost their productivity. So it has a tremendous impact. For example, billions of liters, saving billions of liters in water, reduce the chemical usage and significantly cutting the greenhouse gas emissions. So at TDK, if at TDK ventures, we collaborate with Fasal on sensor technology and they also support them. They are expansion into Southeast Asia market. So this is a, we like, you know, these are three portfolio companies in the past 100 of years we have invested in them and we partner with them to grow them. So their growth has been tremendous since we invested. That is great to know the close partnership that you have helped them with. What kind of a PhD you typically invest in? Is there any like, yes, are you do we come at CD or C or C or C or C or C or C 2? Pre C 2, C is B is the wide range we invest in but C, C, C is the sweet spot for us. And in terms of check sizes, are there any typical checks there? Yes. So we cut anywhere from like not, they are like 250K, the minimum, which is the minimum to 5 million. In fund one and two, we go from 250K to 5 million. In fund three, we go from 2 million to 10 million. And they check size. Same for Indian startups as well. Yeah, it's globally, like you know, this is global. Yeah. And so let's say if you want to focus on these three Indian startups, so what are the top three things that did it looks for in a startup while investing? If you can highlight from the startups, yes, you have invested till now. So we always call them as we always call the startups that we invest as King of the Hill. So the King of the Hill is like concept we have, which comes we look for three different things. Threefold. Three equally important areas. One is the strategic fit and synergies. How good this company is strategically fit for TDK and what are the synergies we bring? And how can it be a equal in for both of us? Not only for TDK, not only for like, you know, for the startup, but how it can be equivalent. So that's the first criteria. Second criteria is the financial returns. If I invest in this company, how big it can be? What is the financial like now? So what is the arc and how big it can become? So that is the second area. And the third is the societal impact. How good like, you know, how it can create a big impact if this startup becomes big and like, you know, reaches the maturity, what is the impact that it can create for the society? So the intersection of these three circles lies the King of the Hill. So that's what we call it as. Now this is the main criteria we look at it. And of course, you need to start with a huge term. It needs to have at least a 10 billion total addressable market at least. So that's the minimum. And apart from that, we look for strong leadership and team dynamics. So that's very essential. So indeed, take when the challenges are complex and there are multistages, you need people with like, you know, strong technical leadership and the commercial and the commercial partner. And you need to have a, you know, in the team, a member with a good business argument. So look for and the dynamics. How well the team gels together. So it could be they have like, you know, all these competencies, but they may not gel together very well. So that also is not what so we look for strong leadership and team dynamics. That's also apart from this criteria. Great. Sounds good. I think that gives a very good overview of what TDK is, what it does and how it helps various startups to exponentially scale and get the right value. I would like to turn our discussion now on your personal journey as well, a bit. You have a PhD in mechanical engineering, then you were a deep tech founder yourself and then you transition into VC world. Now as the VC domain is growing, a lot of a lot and a lot of people are getting interested in careers in the VC industry as well. So if you can highlight from your experience that what motivated you first to join the VC industry and then what are the skills required to succeed in this career? I have a slightly unusual path to venture capital. So I began my career as an applied researcher. After finishing my PhD in US, I came back to India to work in, you know, the Central Electric Global Loser Center. And then I was delivering solutions for business problems in wind and aerospace business divisions. Then I got, this was my first work experience in Park RIT R&D. So there I learnt about how to like, you know, take a research and I'm going to go see you. So then I got an opportunity to work at Rice. It's a national research in student Sweden. It's a very unique model in your way form of bridge, they're neither university nor industry. They form a bridge between universities and industries. They help various industries in the way and ensure their competitiveness. It was very interesting because we can focus on delivering practical solutions and you'll also get a chance to work in wide variety of different deep tech areas like advanced manufacturing, batteries, robotics, IoT and energy systems. So it was fantastic and for me, through the journey, making an impact with the research of solutions, something is my priority. In 2020, while working on one of these projects, which is like no, robot-based IoT manufacturing, my colleagues and I came up with a solution. And it was very appreciated by the conservation members. The enquiries were saying, "Yeah, it's really good. We don't start a launch startup and scale the solution." So that's how I came into entrepreneurship. So once I started on scaling the business, it was like a transformative experience for me. And I started on a technical background. I thought it's a huge challenge. Looking from a research perspective, giving a solution rather than just giving a solution, how do you take it into a business, make it as a business? What are the realities of building a company from ground up? How do you raise the funds? How do you navigate uncertainty? How do you understand the business development? How do you engage with customers? And what are the very enough tough decisions to make? So this really like, the three years, 2020 to 2023, start a front-to-front, really a transformative experience for me. Yeah, I got a first-hand experience of what it means to be an entrepreneur. Everybody like you know, you can read about it and you know, hear from others. But once you go through the journey, it is very, very like you know, it's transformative. So that's what I had. And then was the point in my startup journey. I faced a critical decision. Either I can continue scaling one company or I can transition to venture capital where I could help multiple startups of data is the potential. So then the choice was very clear. I chose like now venture capital is what I wanted to do to make a broad impact because I had like, you know, I thought my unique deep tech expertise and entrepreneurial experience. If I come back and work, I thought it would be very unique. So I thought this is my unique uniqueness that I can bring to the table. So I used that and started like, you know, so like approaching venture capital industries. And I was following deep tech, especially deep tech venture capital because I cannot, this experience is very useful only in deep tech pieces, not in general pieces. So I thought like, you know, I will look for companies in deep tech pieces. And then I was especially very fascinated with 3DK ventures because of their global deep tech exposure. They're not only in India, they have the global deep tech. But what happens in other parts of the world and how that can be applied in it. So they were, I thought it's a very interesting company and I got an opportunity to interview and I did that and very grateful that 3DK ventures took a bold bet on me and someone who's non-traditional and it's very motivating. So I would say this is how I ended up can tell you give answers. >> Great. >> And then how are you seeing your current or existing skills from your startup career being useful here and are there any other skills as well that you are needing to develop? >> Yes, of course. So the main skill adaptability, switching context, in VC, we need to switch context often. Like in the morning and then you need to switch to another server and then you might need to talk with the portfolio companies. So you need to switch context very often even within a day and like you know and also across your career you need to be updated. You need to be constantly on your tools. You want exactly the need to develop and start learning and I'm missing any of yours. What should I do? >> So this adapt this one context switching that is a very transferable skill that's coming. And also relationship building. As a startup when a growing issue build relationship with their customers and also you need to be a people person. Especially if you are from a business side, that I think that's both the transferable skills. And the other thing is like how do you look at it from the other side of the table that you need to learn. So you as an entrepreneur look at like in a solving and all that. But if you are evaluating the startup and the other side then you need a different end of skill. How the technology is going to go. How this can happen. Whether will they give a venture standard and how this is happening. How it can make an impact. So these are all other things that no answers. I think venture capital is more like a craft. It's not only about the hard skills. All the soft skills. It's a craft you have to develop your own side and it takes years to develop. So I'm just at the start of the journey. It takes years to develop those skills. But I would say networking. And if at all for others who are trying to break into it. Networking is like you know really it's a people business. When it comes to people business. You need to be building genuine strong relationship with founders, co investors and industry experts. You need to be very aware. A mobile you need to have a genuine. Interesting. In helping the entrepreneurs. It should be genuine in helping the entrepreneurs. If you have not interest in helping entrepreneurs then it's very difficult. You should have a genuine curiosity and interest in doing that. And above all patients you need to have patience. It takes time and mentorship. Seek out and get mentorship. So I was like you know going around like asking with many tech species. Hey I have this expertise. We have the venture capital expertise. I will be willing to do like an if you have a company that is a deep tech. I'm willing to do some due diligence or like you know. Look at your giving a perspective. Both from entrepreneurship and also from a technical person. So I will allow to give I want to volunteer my time and give this in and learn from. So I kept asking many of them and many of them were like some of them were very kind to give their time. So I have to ask be very patient. You might ask content people. Five people will help you. That's good enough for you to break into VC. So patience is the key. I would say. Got it. And couldn't agree more. I think if you have a track record of helping entrepreneurs in the past. I think that really helps break into the VC world. And if you are under for myself, you would obviously have those kind of skill sets already set. And some of the aspect that you mentioned one can hold over time to really be successful in this industry. So my final question was and would be a bit forward looking. What are some future opportunities in deep tech domain that you wish some startup would capitalize on? Yes. So definitely I have I come from a manufacturing background. So I have like you know one thesis which is large scale foundational models in manufacturing. So manufacturing there's a real opportunity capital is on this so why I will give a small context. For example, like you know these keep the telephone landline revolution and directly went into the mobile revolution in India. So similarly in manufacturing. We will like you know the new industries the new factors that are built will be state of the art. They will directly be into industry 5.0 rather than industry 4.0. So directly going to this solution. So if you're going into that solution into starting it will be very digital it will be softer focused right now. What's happening in industry will solve the rest for example take one industry cement. If I'm going to deliver you a softer I go to your like you know something which gives you solution. As a founder I will have certain insights with the cement industry. There are certain native one associated with it. I will develop in size. So I'll do some work every plant is also different not only every industry is different given within industry every plant is different. So the nuances are different. So I have to do some customization work are non-procaring engineering. We used to call in our evil for every industry customize it it takes some time and then you deploy the solution. And then what happens is next time when another cement industry comes you like you know you can't figure it easy since you have done some work and slowly land in one industry and next fine. But if next day a steel industry comes let's say steel industry comes and ask me for a solution I will not be able to provide. Because what happens the nuance on the insights what I get in cement factory will not be applicable to the Syrian steel factory. So once again there will be another like in our customization that work needs to be done. So it keeps on going like that to all like this if you take foundation if you take the underlying physics between all the manufacturing processes. They are all the same. If you say use a large scale foundation model that can understand the fundamental physics underlying all the manufacturing process and also the data when I was mentioning about the solution what I missed was the data. Through dealing with the solution need lots of data if you got to use this with a traditional year mission learning model a lot of data to deliver the solution. But if you got to use large scale foundation model and have this kind of parameters it can be zero shuttle one shot. And another factor that need be driving this large scale foundation model is the lack of skill labor. I think worldwide we face this problem of skill labor in manufacturing. The expertise what people gather is lost. So this manufacturing this large scale foundation model can act as a manufacturing co pilot for you know for the people need ones who are like on the training. So this can really help them have this. So that's why I think an India is very strong in software and we are putting the theoretical ones of manufacturing and metal science. So if we if founders can combine all this and create large scale foundation models for manufacturing that I think it's a very underrated area. Manufacturing robot it's for the industrial space. The last foundation models and industrial space. So that I think is a fantastic idea to focus on in my opinion to start it. Got it that sounds great. In fact, I was also reading some maybe we go back on X around an LLM agent system that was built to autonomously design metallic alloys and that was included like having domain knowledge integrated into this foundation of around physics and everything. And come up with those metallic alloy designs. So I certainly see efforts in the industry going there and your call out to have that in India as well given our rich experience in this sector and our experience with software building. Certainly makes for a strong case. So that's one area I would say the other areas data center cooling. So as a distant first section goes like a gross data center cooling becomes a very critical challenge. So there are a lot of innovative cooling solutions coming out. I would say direct to check cooling is one area and then the another broad area I would like to go is precision and detect. There are three like you know it's a intersection of biology human activity and whether three are highly uncertain. So this creates a lot of inefficiency and whenever there's a lot of inefficiency there is a chance for like no disruption and making it better. So I think the position of the culture is another area and it's a. Thank you for that quick overview was an appreciate so and thanks for taking your time to share more about TDK ventures and it's initial days in India. I certainly hope and I'm confident that it's sound leadership like yourself and the entire global expertise that it has will have more and more success stories from TDK in India. Thanks for sharing your personal journey of getting into the VC world. I'm sure the listeners some of them would take inspiration from that as well who are looking towards that as a career. Thank you for coming on the show. Thanks for the invite. I really enjoy the conversation.