BY ROBERT MALTHOUSE
- TDK Ventures has invested in a number of early-stage storage companies
- Investment director says companies seeking funding must ensure they are ‘solving customer problems’
- Green hydrogen could have ‘generational impact’, says Anil Achyuta
How can energy storage companies increase their chances of attracting investment?
Developing an obsession with the wants and needs of your customers is a good place to start, according to Anil Achyuta, investment director and founding member at venture capital fund TDK Ventures.
Last year, TDK Ventures, an energy and clean tech specialist, became one of the latest venture capital funds to increase its stake in the energy storage sector.
In April 2021, it was announced that TDK Ventures had participated in Battery Resourcers’ $20 million Series B funding round. The investment in Battery Resourcers – a US-headquartered company that recycles batteries and then turns the recycled material back into critical battery materials – was not TDK Ventures’ first venture into the energy storage sector. The fund’s portfolio includes li-ion battery electrode manufacturer AM Batteries – in which TDK was the lead investor in a $3 million seed funding round – among others.
Established in 2019, TDK Ventures launched with its $50 million ‘Fund I’, which made a total of 15 investments over a period of 18 months and secured three exits: one was an initial public offering – involving the listing of hydrogen fuel cell company GenCell on the Tel Aviv stock exchange – while two took the form of M&A deals (Origin, which was bought by Stratasys, and SLD Laser bought by Kyocera).
TDK Ventures is now making investments via its ‘Fund II’ – launched in April 2021 – which, at $150 million, is triple the size of its predecessor.
So far, Fund II has made a total of seven investments, but more are set to follow.
Energy Storage Report spoke to Achyuta to find out what the fund is seeking when surveying the market for storage investments, what he sees as the biggest opportunities in storage, and what energy storage companies need to do to maximise their chances of attracting early-stage investment.
What characteristics do you look for in the energy storage companies you invest in?
From a TDK Ventures perspective, we want to invest in companies with a triple bottom line. This means: huge financial returns; tremendous strategic value – for both the company we’re investing in and our mothership company TDK Corporation; and thirdly, companies that are doing good to the world.
We follow the United Nations’ sustainable development goals and if prospective companies are not aligned, we don’t invest. An excellent example of this is Battery Resourcers. We invested at the time it was just a university spin out with some tremendous founders. Now the company has just announced it’s going to build the largest lithium-ion battery recycling facility in North America.
What do you currently see as the biggest opportunities in energy storage?
Green hydrogen has the potential for generational impact. In a decarbonising world, the chemical industry in particular could be the biggest opportunity for green hydrogen. When you think about hydrogen, people don’t realise that this is a foundational molecule used in mining, refining, steel, concrete, cement, and petrochemicals as a source of feedstock, a catalyst, and a reducing agent.
That’s really everything that’s around you. I believe green hydrogen can play the instrumental role of feedstock for these industries that are creating this problem of climate change. So, my money is on green hydrogen in electrolysers that will couple with wind and solar for energy creation with the possibility of decarbonising industrial chemicals. Potentially one day, we could be even storing that hydrogen in caverns for a long-term grid-scale energy storage as well. But the applications in terms of replacing ‘grey’ hydrogen with ‘green’ hydrogen in the chemical industry are here now.
What do you see as the biggest barriers to the wider adoption of energy storage?
For me, a fundamental barrier to widespread adoption is the availability of purposeful technology at the right cost. And this can be a product of a lack of funding and government support in new technologies, especially at the scale-up level. We need a higher rate of scalable innovation that will eventually lead to technology breakthroughs to enable wider adoption of energy storage.
What do early-stage energy storage companies need to do to maximise their chances of attracting investment?
Be crazy about your customers. Understand what they are thinking about and deliver commercial solutions for real world problems. I see a lot of technologies that are really cool, but they aren’t solving a specific customer problem. When start-ups come with a technology looking for a market, it almost always doesn’t work well. So, it’s important to come in with a technology that provides a solution to a pervasive problem because that’s what investors are looking for. For us at TDK Ventures, it always comes back to that triple bottom line and if all three come together, that’s when we make an investment, but frankly, it’s probably what start-ups should be asking themselves, whether they take our investment or not.