Anil Achyuta is Managing Director for the corporate venturing arm of the Japanenese electronics manufacturer TDK, TDK Ventures. He focuses on investments in energy, Industry 4.0, healthtech, and mobility. We spoke with Achyuta for the research report Successful Startup Engagement and Corporate Venture Capital. And he’ll be among the speakers at our Impact 2023 conference in Boston this fall.
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The CVC itself. TDK Ventures is the CVC arm of TDK Corporation, which is a Japanese multinational conglomerate that has been around for over 80 years. TDK Ventures, however, has been around since 2019. I have been there since the beginning with two of our other co-founders. Our focus areas are specifically in deep technologies… so we invest in four major verticals: energy, industry 4.0, health tech, and mobility… We always invest in companies that have a physical layer to the world… we’ve not yet made a software-only bet. Our first fund was a $50 million fund, and that fund is fully deployed.
Building strategy. By itself, it’s impossible to design a strategy for a company that makes little parts. We’re like Intel Inside — we’re everywhere. If you’re wearing headphones, the neodymium magnets come from us. If you’re using a laptop, the batteries come from us… It’s practically impossible to design strategy for a company like this, so what you want to do is go in and really work with the companies that are going to change the world in the way they’re taking off, and you want to ride along with them. If you invested in a king of the hill in the right exploratory manner, you would not only make financial returns, but you also get the strategic value. We’re of the belief system where you cannot, as a CVC, do just one or the other. You will fail… We wanted to do both at the same time. Of course, we’ll make some tradeoffs in the portfolio construction.
Building a CVC from scratch. You have to unveil yourself first — what is it that you stand for? If you stand for the mothership getting value, then it’s a win-lose opportunity. That’s where most corporate venture [groups] lose; they get terrible dealflow. You get amazing dealflow [and] the greatest entrepreneurs want to work with you because you believe that you’re entrepreneurs first… and when you really believe and act that way, it becomes second nature to you to think entrepreneur first.
If you stand for the mothership getting value, then it’s a win-lose opportunity. That’s where most corporate venture [groups] lose; they get terrible dealflow.
KPIs and metrics. My first KPI that gives me my bonus every year is called net promoter score from the entrepreneur… Many entrepreneurs come to me and say, “You’re the first one that has an accountability metric for the entrepreneur.” For me, I don’t care about making the entrepreneur happy; I want them to be successful. Sometimes that means giving them tough feedback; sometimes that means giving them hope; and sometimes it means giving them real value. At the end, our true north KPI is whether the entrepreneur is willing to make an introduction to another entrepreneur that they trust. If they don’t do that, then we’ve not done our job. Every company we invest in, we take it very seriously, and it’s almost literally that they’re my customer. I tell people I work for 12 companies: 11 startups, and TDK.
Using the traditional VC compensation model. It makes no sense for someone like me or my associates — who are rockstars — to stay in a fund like this if they’re [just] paid a salary and a bonus — it never works. With entrepreneurs first, it works really well, because my success is directly related to their success… We call them CVC 2.0s — Schneider Ventures, TDK Ventures, Orbia Ventures, there are a bunch of us — we’re designed in a similar way. That’s why you don’t see churn.
Using two teams for longevity. We have two teams. One is the investment team; the other is the engagement team. The investment team is startup facing… The engagement team focuses on bringing the TDK mothership to the startup. You have dedicated people who have incentives to help the startup.
I tell people I work for 12 companies: 11 startups, and TDK.
That’s one part of our criteria on how to select [startups]. If we can’t bring value to the startup through TDK technology, why invest in them? Then I’m no different than a financial investor… We say, “Hey here’s the value we can bring.”… Or sometimes, we lead and say, “We can lead this because we have a ton of expertise and unique insights in the space — like the battery recycling space, battery technology space.”
The bottom line is, the engagement team is truly responsible [for] building that synergy together, and that differentiates us from many other CVCs, who start off with the investment director or investment principal or partner. There’s just one person, and that person is supposed to do the board work; that person’s supposed to do all the value-add work; that person is supposed to do the business unit work at the end. But when you do that, they become a single point of failure. What we’re [instead] doing is giving the startup an opening in the organization so they can use that chain reaction — so I’m not the only person holding all the cards and holding it close to my chest.