Toyota provides one other $1.5B to its wager on startups at each stage

Toyota is looking for the next new new thing in mobility, climate, AI, and industrial automation. Its answer is $1.5 billion in new capital that will focus on, and invest in, the lifecycle of startups — from the first seeds of an invention through its growth stage and eventually to mature companies.

Toyota made two related announcements Tuesday that provide a snapshot of the company’s growing interest in the startup ecosystem. It also hints at how those startups, and their inventions, may play a part in Woven City, a prototype city located on a 175-acre site at the foot of Mount Fuji in Japan designed to incubate startups and that opened this year.

The Japanese automaker said Tuesday it has created a strategic investment subsidiary called Toyota Invention Partners Co. with about $670 million in capital, while its growth-stage venture arm Woven Capital launched a second $800 million fund.

The Toyota Invention Partners subsidiary will take a long-term strategy focused on Japan-based startups, eschewing the traditional fixed investment periods found in other funds. Woven Capital general partner George Kellerman described Toyota Invention Partners Co. as a bookend of sorts to the company’s other investment organizations.

“One way to think about them (Toyota Invention Partners) is they’re bookending what Toyota Ventures and Woven Capital are doing,” Kellerman said in a phone interview. “They’re doing the really early stage on one end, but then they’re maybe doing these longer-term project finance, asset management type of infrastructure investments, that might be a 30-, 40-, 50-year type of investment.”

Toyota Invention Partners is at the “zero to one” stage, Toyota Ventures covers early-stage, and Woven Capital handles growth stage, he explained. But Toyota Invention Partners may also stick with a startup throughout all of these stages; and if it really scales, it’ll go to the balance sheet of Toyota, Kellerman added.

Kellerman said the two announcements reflect Toyota’s interest in startups — and the tech and innovation that is coming out of them.

“The thing that really excites me is that Toyota is clearly leaning in; they’re committing over $3 billion across Toyota Invention Partners, Woven Capital’s fund one and two, and all of Toyota Ventures funds,” he said. “And it’s really about making sure that we can serve the needs of the market and the founders that we’re working with, because their needs change depending on their stage.”

This strategy is illustrated in another investment announcement that was made Tuesday. Machina Labs, a Los Angeles-based advanced manufacturing startup that combines AI and robotics to rapidly produce metal structures, announced a strategic investment from Woven Capital and a pilot project with Toyota Motor North America. The automaker will test Machina Labs’ manufacturing technology to produce automotive body panels and accessories. Woven Capital and Machina Labs didn’t disclose the investment amount or terms.

Woven Capital, which launched in 2021 with an $800 million fund, is still focused on investing in global startups that are entering into a growth stage. The firm has invested in 18 companies from the first fund, including Foretellix and autonomous vehicle technology startup Nuro. It will continue to pull capital from the first fund to support follow-on investments.

This second fund, which is also $800 million, will target 20 to 25 new investments in Series B to late-stage companies working on advancing AI, automation, climate technology, energy, sustainability, and more. As part of the new fund announcement, Woven Capital has also been made a wholly owned subsidiary of Toyota.