Deep-tech needs more repeat entrepreneurs: TDK Ventures chief Sauvage

Bengaluru: India needs more patient capital and corporate venture capital to build globally competitive deep-tech companies, as the sector’s long gestation periods and limited pool of repeat entrepreneurs make it fundamentally different from software-as-a-service (SaaS) and fintech, said Nicolas Sauvage, president of TDK Ventures.TDK Ventures manages $500 million across four funds and has 56 portfolio companies globally. India is its second-largest market by number of investments, with six completed investments and a seventh in the pipeline, Sauvage said.“Overnight success takes 10 years. I think that is particularly true of deep tech,” he said, pointing to the difference in investment horizons between software businesses and ventures involving semiconductors, energy storage, robotics and space.While SaaS and fintech companies can generate exits in four to five years, deep-tech businesses may take six to eight years or longer to mature, de-risk their technology and establish a market. This also slows the emergence of repeat entrepreneurs who can draw on their experience to build successive companies.“If you have an exit in SaaS every four years, you have successful entrepreneurs who can start another company and start another one. In deep tech, you may have that cycle only once every 10 years,” he said.TDK Ventures’ current Indian portfolio includes electric two-wheeler maker Ultraviolette Automotive; Exponent Energy, which focuses on electrifying heavy mobility, including buses and trucks; C2i Semiconductors, which enables efficient power delivery within GPU racks; EtherealX, which focuses on commercial space technology and fully reusable medium-lift launch vehicles; and agritech firm Fasal.India is still largely in the first cycle of deep-tech entrepreneurship, unlike the US, where successful companies have spawned networks of experienced founders. Sauvage cited the “Tesla mafia” as an example, saying TDK Ventures had invested in six companies founded by former Tesla employees.TDK portfolio company Exponent Energy illustrates how Indian market conditions can create an advantage for deep-tech startups. It began by developing battery-management systems for electric three-wheelers, targeting a fragmented market of more than 70 manufacturers that could not necessarily develop the technology in-house.Having matured its technology in India, the company has moved towards fast-charging electric buses, with potential applications in overseas markets, including Europe.TDK Ventures is looking at opportunities across computing, semiconductors, energy transition, thermal batteries, heat pumps, mobility, agriculture and space. Its investment philosophy requires each portfolio company to have the potential to return the entire fund, while also delivering strategic value and contributing positively to society and the planet.Sauvage said conventional fund structures could constrain deep-tech investing because they require investors to exit or distribute holdings within finite periods.You use AI every day. Now get your AI Quotient. Take the AIQ test.