Why we Invested in TWAICE
During the recent closing of Speedinvest i — the newest focus fund of Speedinvest dedicated exclusively to Industrial Tech — we were strongly driven by an underlying hypothesis: despite insufficient access to funding, European Industry 4.0 offers high potential for promising startups, founded by entrepreneurs with stellar technical backgrounds and offering innovative solutions to revolutionize the Old Economy.
We believe that the validity of our hypothesis can already be recognized in our latest investment: TWAICE Technologies. The Munich-based startup provides battery analytics based on digital twins of Li-Ion batteries. TWAICE is a spin-off from Technical University of Munich and has emerged from years of academic research, enabling the company to provide cutting-edge technology despite its young age. We are convinced that TWAICE has enormous potential to position itself as the leading provider of battery analytics. Why?
TWAICE is working on the solution for a significant problem in electro mobility and batteries: On the one hand, Li-Ion batteries are extremely costly products (say 30–40% of the total cost of an electric bus) which require complex development including extensive testing and validation. On the other hand, the industry largely lacks sufficient understanding of Li-Ion batteries and their usage behaviour. Hence, determining the degradation of batteries in real-time as well as its remaining lifetime has so far remained a challenge. Most prominently, the aging behaviour of batteries we saw in the Nissan Leaf 30 kWh model demonstrates that even established players struggle when it comes to battery analytics (Figure 1). An insufficient understanding of electric batteries is true for companies of all sizes and types along the battery value chain — a hurdle that to date has kept electro mobility in infancy.
Figure 1: Declining battery State of Health over time for Nissan Leaf 24 kWh & 30 kWh
Providing analytics-software, TWAICE solves this problem by leveraging digital twins of Li-Ion batteries. Each digital twin reflects a model-based representation of the battery which is stored in the cloud and continuously fed with data extracted from the application. This, in turn, enables the analysis of the battery’s current condition in real-time and thus enables a prediction of its remaining lifetime. Additionally, TWAICE permits the optimisation of technical parameters based on proprietary software which helps extend the battery’s lifetime significantly.
The solution of TWAICE offers high potential to pioneer electro mobility — a market whose demand for Li-Ion batteries is projected to skyrocket from less than 100 GWh in 2018 to over 1000 GWh in 2030 (Figure 2). This is reflected (and fuelled) by the market for battery analytics, growing to €1.5 bn by 2022. The background of this growth is the enormous value creation associated with understanding and optimising Li-Ion batteries. TWAICE has potential to service multiple use cases that leverage this value creation. For example, operators of electric vehicle fleets can deploy TWAICE to optimise the usage of their batteries. This can achieve a bottom-line decrease of their operational costs of around 25%. Additionally, manufacturers of electric vehicles and batteries gain access to after-market opportunities such as offering predictive maintenance and extended warranties. Finally, the ability to determine and certify a battery’s remaining lifetime largely facilitates reuse and resale of Li-Ion batteries — making the market for used electric vehicles not so lemon after all.
Figure 2: Forecasted demand for Li-Ion batteries for EVs, 2015–2030 (GWh)
Market sizes, digital twins and GWh aside: we invest in Seed companies and the primary task to succeeding here is to find rockstar teams. With TWAICE, we have no doubt that we have fulfilled this task. When we first met Stephan and Michael we were impressed by the level of energy and vision they brought to the table. It was clear that two PhDs in Mechanical Engineering equipped with an impressive technology, sharp business aspirations and an engineering-heavy team are the perfect setting to shape the battery analytics industry. By the way: we’re not the only ones who believe in the team — TWAICE eagerly collects awards and nominations from institutions such as Climate-KIC, Xpreneurs, Exist and more.
So where do we fit in? Historically, as early-stage investors we support our startups not only with cash but also with operational resources (think in-house agencies for HR, marketing and more) and a strong corporate network. For our Industrial Tech fund, we think our model is extremely value-adding — consider for example tough B2B markets, long sales-cycles and complex buying decisions. In the case of TWAICE we offer support on a number of questions: What’s the right go-to-market strategy? Get advice from our entrepreneurial partners. How can TWAICE go international? Our San Francisco office is happy to give advice. Who is a potential pilot customer? Let us connect you with our industrial network. In fact, we think TWAICE now has access to an amazing corporate network which includes our investor base and that of our co-investor Unternehmertum Venture Capital Partners. We are excited to help TWAICE grow in the time to come and are convinced that TWAICE will help us confirm our bullish hypothesis on European Industrial Tech.
