Europe’s big climate VC bet

American venture capital and startups may get the spotlight when it comes to climate tech. But their European counterparts aren’t exactly slouches. World Fund, Europe’s largest dedicated climate tech VC, launched last year with a €350 million target.

There’s no shortage of investments for World Fund to make. There were more climate tech companies founded in Europe between 2019 and 2021 than in the U.S. and China combined (102 vs. 80), according to the VC firm’s analysis. I sat down with Danijel Višević, a founding partner at the fund, to explore how it’s filling a critical gap in the startup investment ecosystem.

Even apart from climate concerns, the Russia-Ukraine war has made it painfully clear that reducing the world’s reliance on fossil fuels is more critical than ever. That can’t be done without transformative climate tech.

World Fund is investing in solutions. Big ones. The VC firm has set a goal of investing in companies that will collectively save 2 gigatons of greenhouse gas emissions by 2040.

  • How it plans on getting there is by following a strict mandate: only investing in companies that have demonstrated the potential to reduce greenhouse gas emissions by at least 100 megatons of carbon dioxide every year.
  • That’s a tall order for a single VC firm. Two gigatons — that is two billion tons — is roughly 4% of the world’s annual greenhouse gas emissions. But World Fund isn’t alone in its ambitions.
  • Chris Sacca’s $350 million Lowercarbon Capital fund has said it’s targeting carbon removal startups with “gigaton-scale impact.” Bill Gates’ Breakthrough Energysays it invests in companies with the potential to cut carbon pollution by 500 megatons a year.

Five sectors are central to World Fund’s ambitions. The firm believes that energy, transport, food and agriculture, manufacturing and buildings are where it can get the most decarbonization bang for its buck.

  • Agriculture is one of the biggest emitters on earth, particularly animal agriculture. World Fund has invested in QOA, a Munich-based startup that creates lab-grown cocoa, as well as Juicy Marbles, the much-hyped fake steak company. “We are pretty sure we’ll replace a lot of the food that we eat today,” Višević said, adding that World Fund is specifically targeting “everything that can replace eating meat.”
  • It’s not just those five sectors that matter to World Fund, though. Quantum computingis also coming onto its radar.
  • Višević said it can be used to accelerate the development and production of longer-lasting car batteries and has the potential of reducing yearly emissions by up to 7 gigatons. Last month, World Fund announced it had led a €128 million series A2 investment in European quantum computing firm IQM.

Venture capital is only one part of the climate recipe for success. Višević highlighted three key principles that could help accelerate the development and deployment of climate-saving technology.

  • Public spending and government support, which Europe currently has in droves, are a key piece of the puzzle. “We didn’t have that 10 or 15 years ago. Now we have that,” Višević said. He pointed to programs like InvestEU, the European Innovation Counciland the European Commission’s Horizon Europe
  • Expertise in not just money but science is also vital for VC success. In Višević’s view, “VCs are not investing into climate tech as they should and could, although they have the capital. One major reason is they don’t understand those deep technologies.” Many VCs are ex-BCG, ex-McKinsey, but not many are ex-scientists. World Fund’s roster includes scientists, mechanical and chemical engineers and physicists, as well as a mathematician.
  • Finally, investors need to play a long game. There’s often a fundamental disconnect between a climate tech startup’s time horizon and what VCs expect in terms of returns. Complex technologies like the ones World Fund has invested in require time and money to build labs, invest in R&D and scale without immediate profitability. “We don’t invest in three years, and then the project is done,” founding partner Daria Saharova said in a Collision panel last month. Instead, World Fund thinks “in the mid- and long-term,” investing in startups that “are going to be the champions of the next decade and maybe even longer than that.”


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