Europe’s Largest Climatetech VC Fund Offers Investment Insights

How can venture capital finance be disrupted and better harnessed to finance the transition to net-zero?

Danijel Visevic, Co-founder of the recently launched World Fund – Europe’s biggest climatetech venture capital fund – set out to find answers.

Together with Co-founders Tim Schumacher – who was awarded Best Male investor in 2020, Daria Saharova – who was awarded Best Female Investor in 2020 by the German Startup Award Association, and Craig Douglas – a 15-year climatetech and investing veteran, he set up the World Fund.

“We did a pre-closing, that’s something very unique. Usually, as a venture capital fund, you have a first closing, then you invest, and you have a final closing a year later.

“But we knew if we want to raise 350 million Euros as a first-time fund, we need a portfolio, otherwise, those institutional investors who can invest 10-20-30 million won’t invest. So we needed a portfolio and we decided to do a pre-closing and ask investors to give us money before the first closing so that we can build a portfolio.

“We asked the pre–closers to take risks earlier, not to take any interest rates from those who come later.

“And everybody told us, ‘nobody will give you money and go earlier into risk,’ and we had more than 150 investors who in a pre–closing gave us 100 million. Now we are very close to closing another 100 million at the first closing,” says Visevic.

As Europe’s largest investment fund, it acts not only as a funnel for a greater influx of sustainable finance into European startups but as an example of how the venture capital sector as a whole can be reshaped to prioritise climate impact and become more adept at assessing the potential of climatetech innovation.

Visevic says that many traditional VC funds aren’t fully prepared to assess the potential impact and performance of climatetech startups due to a lack of personnel with scientific or engineering backgrounds who can do the maths on the nuts and bolts of the product or service being created.

To increase investor confidence in their ability to understand and accurately assess the potential of climatetech innovation, the World Fund built a team that consists almost entirely of scientists; “they all have a venture capital or investment background, but they are chemical engineers, mechanical engineers, we have a nuclear physicist, a chemist, a mathematician.”

The World Fund sets a high bar for the environmental impact of the startups it invests in:

“We call it the CPP, the Climate Performance Potential, that we first assess before we dig deeper into a startup or a team of founders:

“We invest in companies that can save at least 100 megatons CO2 or equivalent in emissions per year.

“There’s powerful climatetech out there that can already make a leap in this decade, and save more than 100 megatons. This is something we are excited about.”

Some examples of companies that have passed the impact test and received World Fund investment include Juicy Marbles – a company from Slovenia that has developed a steak fillet mignon that’s purely plant based – it has the texture of, and it’s bloody like meat. It addresses meat eaters – men who like to grill: you can grill it like meat, it tastes like meat and it is healthier, it’s made of fermented soy.

The QOA company – a female-led spin-off from the Technical University in Munich – has produced the equivalent of the cocoa bean; producers of chocolate or anything else that uses cocoa can use QOA instead of cocoa which often contributes to cutting down rainforests or monoculture-based farming.

The World Fund doesn’t offer startups operational support, but it does help companies find the right people for their team and implement their ESG.

“We, the World Fund, are leading in terms of ESG in Europe. On Preqin, a platform that compares funds, from among 4000 VC and private equity funds, we are number one.

“ESG standards are not just nice to have, they’re risk-reducing and it increases the probability of your startup becoming successful.

“We also help startups to get several funding rounds through our network of investors and this is very important. We have deeper pockets than other VCs.

“If you need a follow-up round, we can reserve up to 13 million Euros per investment per company to make sure it gets to the point of generating revenue,” says Visevic.

Since its October launch last year, the World Fund has already on average 9xed the value of its investments; “we have shown that we can make money out of money, says Visevic, “so that’s super important to get the traditional investors on board.

“I’m lucky to be in a position as an investor to invest in those brilliant founders, who develop technologies that can make a leap and make a difference already within this decade and the next.

“So it’s possible to reverse global warming before we reach the tipping points and it’s super, super, super urgent. But I also see this technology and these people and I see how powerfully we can disrupt with these entrepreneurial ideas. So this is something that helps me and gives me more than just hope, it gives me conviction.”

Visevic believes energy, biodiversity and agriculture industries will see significant transformation and have huge growth potential in coming years.