There are occasional silver linings even for the blackest clouds. One was as the Covid-19 disease broke out this year competition for deals became a little lighter.
TDK Ventures, the corporate venturing unit of the Japan-based materials group, stepped toward this light. Nicolas Sauvage (pictured), head of TDK Ventures, said it had four deals in its pipeline about to close or that have just closed.
First up for TDK is a bridge round for Origin, a US-based three-dimension (3D) printer of advanced materials from open sources founded by Chris Prucha, formerly a software engineer at Apple and co-founder at Notion, and Joel Ong, formerly a software engineer at Google X, and with prior venture capital backing by DCM, Floodgate and Haystack.
But just because competition has lessened it is usually for a reason. Getting comfortable the startup’s business and management can survive and thrive and there is a strong fit with the parent’s often-evolving strategic needs is usually hard.
Here Anil Achyuta, one of two investment directors at TDK’s $50m first fund, said Origin (its fifth deal overall) shone. “The pain point for 3D printing is 90% target prototype not mass manufacturing. Origin took a SaaS [software-as-a-service] approach to partner with material companies, such as DSM, Henkel and BASF and now TDK, so it could scale up and cut costs.
“Then, when Covid-19 hit there was a massive shortage of swabs in the US as they were all provided by one Italian company. Swabs are hard to make as there are a mix of soft and hard materials to get down the throat.
“Origin in four to six weeks went from a napkin sketch to proof of concept to Harvard study and FDA [US Federal Drug Agency] approval to mass manufacture. Origin is now producing 250,000 swabs per week and scaling up to one million per week.”
TDK with more than one factory around the world has had relatively little need to understand such 3D printing or distributive manufacturing before but again the Covid-19 crisis brought the need to understand or shorten supply chains to customers to senior management attention.
In turn, TDK’s manufacturing expertise and use of advanced materials for electronics is complementary for Origin’s open source strategy, although it will also look at other deals to potentially do metal 3D printing, such as Markforged or Modumetal.
Sauvage added Origin would not replace existing factories but bring new capabilities and systems to TDK and the wider industry, such as potentially replacing lead zirconate titanate (PZT) with polymers.
This was part of his king of the hills strategy – finding startups at the top of an interesting niche but which TDK can turn into a mountain of revenues.
For as the clouds eventually lift the view from the top is even better.