The Long View: How Porsche leverages its innovative strengths with venture capital

In May 2023, Lutz Meschke and Philipp Schröder will meet face to face for the first time. The deputy chairman of the board and board member for finance and IT at Porsche AG welcomes the co-founder and CEO of the clean technology startup 1KOMMA5° to his office in Stuttgart-Zuffenhausen. Both bring personal expectations. After an hour they are completely surprised – and on a first name basis.

“Philipp is young, energetic, confident, attractive. He can organize complex issues well and explain them easily,” says Lutz Meschke gratefully. “Lutz’s office is smaller and more ordinary than I thought,” says Philipp Schröder. “The appointment was very pleasant and less difficult than expected.”

The chemistry is clearly here. All are entrepreneurs through and through, all have shown foresight several times. Lutz Meschke is considered the father of Porsche venture capital operations. In 2016 he showed courage and pioneering spirit when he took his first steps in the world of venture capital. “I said from the beginning: Do not measure these activities by the value of the individual company. It is also clear that not all investments in startups will “fly” in the end,” he recalls the beginning seven years ago. “The most important thing is the strategic value added to Porsche. We are learning an incredible amount and have already brought a lot of products, technology and working speed to the group.

Meschke is standing on the terrace of the Porsche Design Tower in Stuttgart. He lets his eyes wander over the rooftops of the city and gives a momentary conclusion of satisfaction: “Our VK activities have paid off not only strategically, but also financially. They are generating an important push for innovation – and are already contributing to increased value for the company. Overall, Porsche so far it has invested around 300 million euros in 50 different startups.The investment book value of the portfolio is around 400 million euros.

An example from the starter cover is 1KOMMA5° by Philipp Schröder. Porsche was involved at the end of 2021. Two years later, the Hamburg company is one of several success stories that Lutz Meschke can tell about venture capital.

Venture capital is the acquisition of minority shares in start-ups, i.e. newly founded or young companies. A distinction is made between conventional venture capital (VC) and so-called venture capital (CVC).

In VC, an external and independent investment team collects money from investors to invest in young companies. The goal of these VC funds is to sell investments at a profit after the company has increased in value.

With a CVC, on the other hand, a traditional industrial company (“company”) acts as an investor. In addition to the financial prospects of the investment, the investment team of this organization should also recognize the strategic value added. The investing company hopes that its investment will provide access to new technologies, new business models or new entrepreneurial insights.

Porsche Ventures, the CVC division of Porsche AG, is pursuing these goals precisely. He has defined four strategic investment areas: Car & Mobility, Intelligent Enterprise, Sustainability and Beyond. Porsche Ventures has been able to operate independently since 2023. “This allows us to make the transaction process more efficient and get faster access to business ideas and technology concepts through investments in startups,” says Ulrich Thiem, CEO of Porsche Ventures. “Porsche Ventures is Porsche’s sensor in new markets and will therefore continue to fulfill a strategic mission for the company in the future.” new capital, but also access to industrial development expertise, marketing skills or first orders from industry.

When Porsche entered the world of venture capital in 2016, Lutz Meschke followed a modern and international approach: Porsche initially invested in international VC funds. Today, Porsche Ventures is involved in several funds with a focus on the United States, Europe (e.ventures) and Israel (Magma and Grove). Porsche has also invested in the CVC unit of the Chinese carmaker – NIO Capital. “We also wanted to learn how the VC world basically works through fund investments,” reports Ulrich Thiem.

Lutz Meschke describes the period between 2016 and 2022 as “the first generation of our capital operations”. During this phase, Porsche invested directly in 39 young companies and funded 13 startups with the founder of Porsche Digital, Forward 31. Five of these investments have already been sold.

At Porsche Ventures we are creating the basis to convince external investors about our innovation agenda and our future investment strategy.
Lutz Meschke, Deputy Chairman of the Board, Board of Directors of Finance and IT

The most famous investment from this round is Rimac Automobili, now Rimac Group. Porsche joined the Croatian hypercar manufacturer in 2018 – promoting the company to strategic investment and unicorn status. Buffalo is a company valued at $1 billion or more. After several rounds of financing, Porsche now holds 20 percent of the Rimac Group. This is Porsche’s joint venture partner in the Bugatti Rimac venture. Rimac Technologies is also on track to become a Tier 1 supplier for Porsche.

Lutz Meschke can imagine a similar collaboration with 1KOMMA5°. The Hamburg startup offers heat pumps, solar modules, battery storage and charging stations for electric vehicles. Best in package with intelligent network.

Meschke and Schröder meet regularly as part of the “Porsche Executive Champions” program. This stipulates that each member of the Porsche board meets with the founder of the startup once a quarter to exchange ideas privately. It’s about contacts, tips and good ideas – good for both parties.

“With the investment in 1KOMMA5°, we have found a partner that can significantly help us in the evolution of electricity,” explains Meschke. He and Schröder certainly have strong ideas for working together, he insists. But they will talk about it publicly only when they are ready for the market.

Porsche has also recently invested in more established companies that already have high strategic importance for the luxury brand: Group 14 Inc. and HIF Global LLC. “With the investment in Group 14, we can achieve a strong supplier of battery cell chemistry for our Cellforce Group. We would not have been able to do this without our VC experience,” says Lutz Meschke. The same applies to an early partnership with HIF Global LLC, one of the most hopeful players in synthetic renewable energy, called eFuels.

Interesting Farms

Porsche Ventures has defined four strategic investment areas.

Lutz Meschke leans on the railing of the Porsche Design Tower and looks back on seven successful years. “We do not expect this result, but we continue on our way,” he emphasizes. At the beginning of 2023, the operational headquarters of Porsche Ventures was moved to Luxembourg. Meschke: “In this way we emphasize the independence of our VC activities. And we create a basis for convincing external investors about our innovation agenda and our investment strategy in the future.

His gaze now wanders over the vineyards of Stuttgart, as if he wanted to see another unicorn there. He reiterates: “We have big plans for the future with Porsche Ventures.” In the coming years, Porsche wants to invest up to 250 million euros in venture capital – partly through the proceeds from Porsche Ventures’ first portfolio.

Money seems well invested. The next unicorn will surely come.

The content of this website represents selected information from the 2023 Annual and Sustainability Report of Porsche AG so all information is specific to the reporting date and has not been updated since publication on March 12, 2024. German PDF of the annual and sustainability report is mandatory legally.