TOYOTA Motor is putting US$300 million into its venture arm to back early startups focused on climate and so-called frontier technologies in areas like carbon capture, AI and space commercialisation.
The infusion increases Toyota Ventures’ total assets under management to more than US$800 million, the company plans to announce on Wednesday (Apr 10), and comes as companies worldwide have pulled back on venture activities amid a larger downturn.
“If you don’t pursue risky opportunities you’re going to miss out on what’s going on in the world,” said Toyota Ventures general partner Jim Adler.
Toyota Ventures has been profitable thanks in part to its early bet on electrical vertical takeoff and landing company Joby Aviation, which went public last year and also partners with the automaker. “We’re providing access to the most disruptive companies,” Adler said. “It would be malpractice for them not to continue this.”
The fresh US$300 million will be split evenly between the Toyota Ventures’ second climate fund, which backs the likes of hydrogen startup Ecolectro, and its second deep technology fund. That fund will focus on science-heavy startups like satellite servicing operator Starfish Space and quantum computing software startup Haiqu.
As the larger venture world has pulled back, the number of companies that launched VC units fell by about half in the last year, down from 122 from 2022, according to industry data provider Global Corporate Venturing. Other large companies have recently scaled back or shut down their venture arms, including software giant SAP, Coca-Cola bottler Arca Continental, Anheuser-Busch and Verizon Communications, according to GCV.
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Adler said that investing on behalf of a large corporation can be tricky, particularly because the timeframes in the venture world are so long. When he started Toyota Ventures in 2017, executives required every project at the company be profitable within the first three years – a stipulation that was quickly abandoned for the venture group because of its focus on early startups. BLOOMBERG
