This is part of a series of articles about building and funding first-of-a-kind climate tech.
Getting first-of-a-kind (FOAK) climate tech off the ground is hugely capital intensive. From next generation e-fuel plants to factories building components for new types of batteries, FOAK startups need to bring in capital, engineering expertise and customers.
Adding to the challenge is the ongoing dearth of capital available for climate tech. In Europe, funding into the sector dropped 71% in the first half of 2025, compared to the same period last year.
But corporate venture capital firms (CVCs) — VCs which are part of a corporate company — say they can be the partner startups need to get through the FOAK hurdles.
“CVCs are sometimes more comfortable dealing with hardware-focused companies because they have the in-house expertise to test materials and make bets which would potentially scare off a lot of other investors,” says Louis Fearn, investor at In Motion Ventures, Jaguar Land Rover’s CVC.
CVC expertise
FOAK founders need to be experts on everything from factory design to structuring a debt raise. While some VCs have made moves to hire FOAK-knowledgeable talent in-house for portfolio companies to lean on, CVCs have the advantage of being able to connect founders with experts across the corporate, say investors.
“CVCs have the added advantage that they can reduce risk by leveraging their in-house expertise to test out the hardware solutions in a more industrial setting, and also bring in the shared resources of that corporate,” says Fearn.
David Delfassy, investment director at TDK Ventures, the CVC arm of Japanese electronic components giant TDK, agrees.
“One of our companies was facing a significant technical challenge in developing a reactor,” he says. “Without addressing this, the project couldn't go forward. We tapped into the TDK network for experts on that particular technical issue, and were able to find a solution through them.”
After Trump announced sweeping trade tariffs, Delfassy says TDK was able to help portfolio companies needing to reassess their supply chains, based on the company’s history of supply chain sourcing from around the world.
Offtakers
Companies building FOAK climate tech often raise non-dilutive debt rounds to finance their factories with. Those debt providers will want to see offtake agreements — contracts arranged before a product is produced. They’re a sign that a startup is providing something that industry needs.
InMotion’s Fearn says CVCs offer a unique role as an investor because their corporate backer can sign offtakes.
“Strategics can play a very helpful role in that from being an off take partner and signing an LOI (letter of intent) or an MOU (memorandum of understanding), to being a development partner," he says.
“You're getting a well known brand, which is potentially a huge sort of ticket holder, and if you can get them to sign an off take agreement, that will help you raise capital from infrastructure type funds or big banks.”
Jaguar Land Rover has announced agreements with several InMotion portfolio companies, it recently announced a pilot with biomaterials startup Uncaged Innovations and has commercial partnership with Zeelo, which works on sustainable employee transport.
Downsides
But there are some potential downsides to having a CVC on a FOAK cap table. Founders sometimes worry that having a proximity to a corporate company could put bigger competitors off becoming a customer of their startup.
As well as that, there are sometimes concerns that companies could be pushed by corporate investors to move their products towards those suited primarily to the corporate’s business plan.
Delfassy says that if governance is in place, this won’t be an issue. If a CVC is on the board, their influence needs to be structured to avoid potential conflicts of interest, he says.
“Nowadays most investors understand that the value of a CVC far outweighs those potential risks.”
