Meet TWAICE, the company shaping the future of batteries
“In the last five years, it has become obvious that electrification and renewable energy are not trends, but, rather, they’re really major disruptive transitions — which are now unstoppable,” says Dr. Michael Baumann, co-founder and co-CEO of our portfolio company TWAICE.
In this time, batteries have emerged as the key enablers for the transition to emission-free mobility and green energy. But for batteries to truly reach their full, innovative potential, we need to learn more about them — and they also need to last.
TWAICE, a Munich-based company that Michael started along with co-founder and co-CEO Dr. Stephan Rohr, is changing the game for battery analytics. With their software that creates digital twins, which are real-time models of batteries, TWAICE empowers industries — ranging from automotive to stationary energy storage — to use batteries more efficiently and, ultimately, make them last longer.
We first invested in TWAICE’s seed round in 2019 when the team was at a very early stage, but with a clear vision. Many things were far on the horizon. Since, we’ve witnessed TWAICE build one of the most advanced battery analytics teams in the world, open a top-tier battery lab, win a number of awards, and attract an impressive customer base, including the likes of top global players Audi, Daimler, and Hero Motors.
Following their recent Series B, we caught up with Michael and discussed:
— Tackling uncertainties
— Market development
— Establishing chemistry
— Creating momentum
— Looking ahead
Tackling uncertainties
“[Predictive battery analytics] wasn’t even a term at that time yet. It was the missing part of the puzzle to really make electrification and renewables a success story.”
Thomas: You started TWAICE during your PhDs. Let’s talk about when you realized this idea could turn into a large business opportunity.
Michael: We came up with the topic during our PhD at TU Munich. Our research was in the field of second life of vehicle batteries. So, that’s basically the intersection between electric mobility and renewable energy. In the end, batteries are really the key enabling elements for electrification and renewables.
Yet, batteries are also full of uncertainties and drawbacks. The foremost one is their aging behavior — batteries age. Everyone knows this from their cell phone. It’s the same with electric cars. Aging is really complex, hard to understand, and generates a lot of uncertainty for all stakeholders involved.
We asked ourselves, “How can we resolve these uncertainties and really make batteries transparent?” And so within our PhDs, we came up with the TWAICE technology, which is this approach of the digital twin. We soon realized we can apply this technology throughout the whole lifecycle and to different industries. So we saw, on the one side, this huge potential and, on the other side, we saw that there was no one doing this at the moment. There was really hardly anyone thinking about predictive battery analytics. I mean, it wasn’t even a term at that time yet. It was the missing part of the puzzle to really make electrification and renewables a success story. We soon put one and one together and said, “Okay, then let’s do it by ourselves” and started TWAICE.
Market development
“It’s really about which use cases you focus on and then really understanding, in great detail, the customer pain in these use cases.”
Thomas: So, that was the premise for starting TWAICE. After raising a Series B and being in the market for a couple of years, can you share a few other insights — how the product has evolved? What lines of business this has resulted into?
Michael: When we started three years ago, we needed to pitch the problem to our customers. There was a huge lack of understanding as to what the key elements of batteries were. There was huge market creation and also a great deal of customer education that we had to do.
In 2018, we were essentially two PhD graduates who had some potentially cool technology and who had an idea of a business model around it. But it was a lot more work to form two or three scalable products out of this. That’s also what we see right now. I mean, of course, the technology has huge potential. There are infinite use cases, but that also generates complexity when you think about products.
It’s really about which use cases you focus on and then really understanding, in great detail, the customer pain in these use cases. For now, we really want to concentrate mostly on mobility and energy, where we address integrators, operators, and the commercialization of large scale storage systems. They’re the two main verticals and we form products around them. But we also have a third line, which includes the models used in both fields or across industries, specifically in the development of lithium ion battery systems. This is a simulation block engineers can integrate into their system simulations to develop batteries more efficiently, faster, and with less physical testing.
Thomas: The attention on the problem has obviously increased significantly over the last three years. It’s pretty crazy. It’s now obvious that this is a big problem and that we need the technology to solve this.
You mentioned you had to explain to customers the product. And I think that’s an interesting aspect because obviously, as a product centric company, you are very reliant on enterprise sales. The automotive OEMs have historically been very hard to crack for startups and are sometimes known for letting startups as customers run in circles. I think one thing that you guys have done very well is cut right through all this and get to the right point within the company. Is there anything that you can share to help other founders facing similar challenges? Is there anything that worked for you or that you figured out in approaching enterprise sales?
Michael: When you think about such an OEM, I would say it’s a very large organization with a lot of doors. By this I mean, you really need to constantly knock on as many of these doors as possible. There are so many different departments involved throughout the whole product lifecycle. Development, cell and component purchasing, validation of the vehicles, sales, financial services, etc.
And all of these departments almost behave as as individual companies. You constantly need to pitch the product and pitch the idea to all of these different levels and then you soon find out who is really the department with the highest pain point. A lot of startups tap into the “innovation departments trap.” These innovation departments may work on great projects, but aren’t really aware of the problems the other departments experience. Make sure that you’re really talking to the people who have these pains in their daily life. For us, it’s development engineers and team leaders who feel the pain we are trying to solve. They are really willing to also buy solutions that help them within their daily business.
So, I think that’s really the key element — to find those people who feel the pain and are desperately looking for help, support, products, and solutions.
Establishing chemistry
“The chemistry needs to fit. You need to be aligned and share the company vision.”
Thomas: Switching topics, you and Stephan go back quite a bit, but how did you know you would work well together and be great cofounders?
Michael: With the founding team, it really has to be about chemistry. You just have to feel, “Okay, does it fit? Are we on the same kind of level or not?” That is something which comes very, very naturally. And if it doesn’t come, then you also can’t force it and you really shouldn’t try to. That’s really the key part — to be on this same chemistry level.
And then, of course, you also have to really share the same vision for the company, what the company’s doing, and really, for us, accelerating the transition to green mobility and renewables. This is also in our hearts, I would say, but also in terms of ambition for the company. I mean, what’s your plan here? What’s your long term plan for the company? You need to be aligned there to really make it a success story.
Thomas: How do you handle those situations when you disagree?
Michael: There are of course some disagreements. But I think that’s good and also necessary to have some positive friction.
At the end of the day, these disagreements are also what push TWAICE. Stephan and I push each other very hard. I mean, we sometimes disagree very strongly but always have constructive, positive disagreements and conversations which are really outcome and goal-focused. You need this in the founding team, but also later on and then in the management team. You need to be able to have these very constructive disagreements and be able to iterate very fast in order to address all the challenges.
Thomas: You mentioned the broader management team. Are there any guiding principles that you apply in hiring? And how do you think about building the team in general?
Michael: Like what I said for the founding team, the chemistry needs to fit. You need to be aligned and share the company vision.
What is probably a little bit more specific when it comes to the management team, you need to align in terms of roles — what really is the role of each and every one as you add someone? What is it not? Of course, there always needs to be some kind of distinction. It doesn’t make sense that everyone does everything, then it just kind of becomes redundant and inefficient.
But also, the personal side needs to fit. It’s hard work, but there should be a high fun element. You should be willing to go for a beer together and have a chance to have a good time. I mean, it’s a very close relationship, very intense, and, most likely also long lasting.
Thomas: Your various patents already showcase TWAICE’s tech defensibility. But tech defensible goes beyond that. Team also plays a pivotal role. You have a high number of PhDs on your team and maintain close ties to nearby universities and research projects. Can you share more about what has worked for you here?
“Battery analytics is a very new field. Due to that, we just need and want to stay as cutting edge in terms of technology and source the best people.”
Michael: We still have a very close relationship with our university. We do a research project with our former chair, Professor Lienkamp. We also work closely with Professor Jossen, who is a global leader in batteries.
This field of batteries — especially lithium ions batteries — is rather young. The aging behavior of batteries is not fully understood. That also means that when it comes to employees, there is not a huge talent pool. For instance, when you say, “Okay, I’m looking for embedded programmers or front-end developers, those roles have existed for quite some time.” Battery analytics is a very new field. Due to that, we just need and want to stay as cutting edge in terms of technology and source the best people. So, we need to stay close to research, but, in some cases, really need to educate these people by ourselves. And this is what we still very often do. There are a lot of students and students have written their theses with us. Just a week ago, a student from such research project has joined as a full-time developer. For us, this is one element which helps to really ensure that we get the best kind of talent for TWAICE.
Creating momentum
“Success sells. Use the momentum you generate as a company and, then, time fundraising with your own momentum.”
Thomas: As we talked earlier, there’s been newfound interest in the battery tech and electrification in recent years. Let’s talk more about that here in Europe. Also, what do you think is still necessary in terms of getting ahead especially on these deeptech topics?
Michael: There’s a lot of momentum in the market, not only in electrification and renewables, but also in terms of venture capital.
What is important —especially when we talk about deeptech — there’s definitely a lot more needed than just money. It’s also how we pick our investors. We always said there are essentially three main elements:
- They really need to understand the market and the industry and what it means to build a company in this space. It probably means having long sales cycles and knowing revenue won’t ramp up in the first two years. VCs need to understand the market industry.
- And they need to share the big vision. Deeptech companies have, let’s say, a longer pause, until they really start to flourish and become large companies.
- And, of course, you also need investors to fit on a personal level. It’s a very close collaboration. And you have to feel that this really will work out long term.
Thomas: You mentioned the fundraising aspect. I mean, we got to know each other very early in your company history, basically, when you were just getting started. We stayed in close touch over a few months before investing. I think one thing that impressed me very early on was that you were able to very clearly describe the use cases and paint a vision of what TWAICE could become. And as we said before, there was a lot less attention on the space than there is now.
But beyond that, is there anything in the fundraising process that always worked for you particularly well?
Michael: Always try to fundraise when you don’t need the money. That’s probably the most important aspect. And then the second one is also building up alternatives. That’s super crucial. Things are only done when you’re sitting at a notary and the ink is dry, right? So, always build up alternatives.
Of course, success sells. Use the momentum you generate as a company and, then, time fundraising with your own momentum.
Looking ahead
“Battery analytics is really the enabling element for the whole lifecycle of batteries and we at TWAICE really want to become the glue of that industry.”
Thomas: Share a bit more on where your vision stands and what’s ahead in the coming years.
Michael: With the vision, we always tried to frame it in a five-year picture. In the last five years, it has become obvious that electrification and renewable energy are not trends, but, rather, they’re really major disruptive transitions — which are now unstoppable.
Now, when we look into the future, we also need to watch out for certain things that may go wrong in the transition to electric. We see some symptoms already now like battery recalls, cars going up in flames, and so on. But that’s partly why we really see battery analytics as the key element to make these transitions a success.We are now already category-defining in this battery analytics field. We are two years ahead of everything that is in the market right now. And we want to further grow our advantage in this market and really become the global provider for battery analytics.
Then, when we take a look beyond that, and I think that’s really important — and what probably most people really can’t understand and also kind of touch right now — is what this transition really means for us. There’s one citation we use from Sven Bauer, the CEO and founder of BMZ, one of the largest battery system manufacturers in Germany, said in 2013 approximately each fifth job in Germany will be tied to batteries or will be attached to batteries. I think this really shows the order of magnitude of change in which we are at right now. Battery analytics is really the enabling element for the whole lifecycle of batteries and we at TWAICE really want to become the glue of that industry.
That’s very high level. What does this mean operationally? We are now very active in Europe. We now want to extend our footprint in the US but also China, of course, is a super interesting market. We will increase our product offering, too. There are a lot of untouched use cases still and we are super keen to really go deep into them and extend our product offering and also form some more exciting and more intense relationships. We are working together with the Munich Re and with the TUV Rheinland. And, yeah, we are happy to intensify these relationships and then really offer additional solutions upon our pure technology.
Thomas: It’s really a global opportunity.
And just staying in automotive, if you think about electrification plus everything going towards autonomous and that leading to managed fleets, in the end, what’s really out there is managed capacities of batteries. I think it’s easy to get a sense for how big of an opportunity that alone is going to be.
Michael: Definitely. It’s a massive opportunity.
