German deeptech VC First Momentum, which invests pre-seed cheques into technical founders, has raised €35m for its second fund. The VC aims to back B2B companies in areas like computing and AI, industrial startups and energy.
First Momentum has been raising its second fund — nearly 10x larger than its first fund of €4m in 2018 — since way back in 2022, and has already backed about 20 companies. It aims to invest in up to 35 companies in total, and writes first cheques between €200k-€1m.
“We luckily had a few exits already in the first fund, and obviously that helped during the second raise,” founding partner Sebastian Böhmer tells Sifted.
“Many LPs still consider deeptech to be a pretty long game, but what we look for also in our portfolio is to have companies in there that have more of a SaaS-type kind of development, where you also see early revenue inflection points in the early years.”
The fund is backed by LPs like family offices, industrial companies, public money and some fund of funds, although the firm declined to provide names. First Momentum was founded and run by a group of engineers, researchers, and operators from universities like the Massachusetts Institute of Technology, Karlsruhe Institute of Technology and the Max Planck Institute.
Founding partner Andreas Fischer says they’re already thinking about fund three, but that the focus right now is on deploying the new fund; “I think we’ll also have to wait and see how the entire market is behaving as downstream consequences from what is happening in the US.”
The rising geopolitical tensions with big tariff threats from the US are making the VC landscape murky.
Böhmer says the playbook for most early stage deeptech VCs and founders has been to access American capital early on. “We wish that more of this capital will be coming from European investors in the near future, and if that trend accelerates as a spillover effect from tariffs and all the political things going on, then that’s welcomed,” says Böhmer, adding that the American market is still very relevant from an investor and customer perspective.
What First Momentum is eyeing — and avoiding
The new fund will invest in areas like novel materials, automation, grid infrastructure, energy storage and edge computing.
Within the industrial space, Fischer says there’s a lot of industrial companies “overhauling core components of their business — so what happens inside of their factories and their operations, from automation on the shop floor to new production methods to introducing robotics.”
Plus, fewer founders are shying away from having infrastructure components like factories or plants as part of their businesses, he says: “I think this is a mix of the founders becoming bolder in that sense, but also capital market structuring more and more around capital for these types of things, where it’s not just about equity.”
Indeed, other big VCs like mega US firm General Catalyst — which the First Momentum partners point out as active in the space — have been experimenting with structured financing for energy companies.
Elsewhere, Böhmer says they’ve already done several deals in the aerospace, techbio and software infrastructure domains with the new fund. He singles out aerospace as having a strong supply chain and talent pool in Europe.
One area First Momentum is avoiding right now? Certain types of robotics.
“Robotics is a tricky field,” says Fischer. Although it’s become an exciting area because of how much the software has improved in recent years, he says, “there’s also a lot of fantasy in there on how large those cases can become in a certain timeline. This is probably the closest thing on the hardware or physical world that is attached to AI, so you get some trickle down effects on what valuations AI companies are raising on that happens [in] robotics,” he says.
Fischer adds that “basically every company” is pitching building an LLM for robotics or the physical world. “This is something where we’ve been very cautious about; like, are we underwriting the right narrative, or is this a borrowed narrative that just comes from the AI space, and do the growth assumptions make sense?” Böhmer adds that humanoid robots are still facing a lot of challenges, particularly with replicating the dexterity of human hands.
Still, the partners have backed a number of startups so far in the new fund, including US- and Germany-based Octomind, which does machine learning-based autonomous software testing; Amsterdam-based Brineworks, which is working on ocean-based carbon removal; and Munich-based Quantum Diamonds, which is developing quantum sensors for semiconductor manufacturing.
It’s not just the partners that are sourcing deals; First Momentum has a venture scout programme of more than 100 scouts in universities and deeptech startups.
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