Inside Europe’s Largest Climate Tech Venture Fund
Climate science has spoken and she’s craving some plant-based filet mignon with a cocoa-free chocolate alternative for dessert.
These extreme niche products belong to the Global Fund’s portfolio of emissions reduction companies. The Berlin-based venture capital firm says it lets science determine which companies to back. The result was an eclectic mix of investments, which also include a wooden credit card and a manufacturing-focused business in the space.
Billing itself as Europe’s largest climate tech venture capital fund, World Fund was launched last October with the aim of raising 350 million euros ($472 million) to support startups capable of reducing emissions. . The companies it funds are primarily determined by what it calls the Climate Performance Potential (CPP), a score developed by a top mathematician from the University of California at Berkeley and the University of Bonn in Germany.
The Global Fund aims to save two gigatonnes of emissions by 2040, equivalent to 4% of all global emissions. Each company must prove to the fund’s partners that it is capable of eliminating 100 megatonnes of greenhouse gas emissions per year.
Co-founder and partner Danijel Visevic says this has filtered out up to 90% of the more than 1,600 applications received by the Global Fund since its launch, mostly from energy and battery-related startups. The fund issues initial investment checks for amounts between 1 and 10 million euros ($1.35 million – $13.5 million).
The handful of companies in the portfolio may seem like an odd mix at first glance, but each serves a climate-friendly purpose. Munich-based QOA, maker of a 100% cocoa-free chocolate product, aims to slow the deforestation of West African rainforests by the chocolate industry by offering consumers a tasty alternative. Treecard is a Mastercard-backed debit card issued by Ohio-based Sutton Bank, made from sustainably sourced cherry wood and recycled plastic bottles. Eighty percent of the company’s profits go to planting trees and climate initiatives. UK-based Space Forge focuses on orbital manufacturing technology, which is basically the automated production of things like semiconductors in space.
“When I first saw it, I thought it was crazy,” Visevic said Yahoo Finance Canada on the sidelines of the Collision Technology Conference in Toronto. He figured the fuel and emissions needed to launch satellites couldn’t be climate friendly. However, chip makers use a lot of energy to create space conditions on earth to build high-quality, energy-efficient semiconductors.
The Global Fund’s climate science-based investment approach is a much narrower version of environmental, social and corporate governance (ESG) scores, which have come under fire since the height of ESG’s popularity. in 2020. Visevic says many investors often confuse ESG with impact investing.
“Some oil and gas companies have high ESG ratings because they have high standards in their industry, strict regulations, and they can treat their staff well and use renewable energy for some of their operations,” a- he declared. “But their impact is a disaster.”
Last month, the Global Fund received a major endorsement from PwC Germany. The German arm of the global auditing and consulting giant has invested an undisclosed sum in the fund as a new “anchor” sponsor. Other partners include Trivago co-founder Rolf Schrömgens and German soccer star Mario Götze.
With the Global Fund halfway to its €350 million funding goal, Visevic says audit expert PwC’s vote of confidence will help attract more big investors. This level of due diligence, he says, could be critical, as looming recession fears threaten the appeal of riskier investments at an early stage.
“We are a first-time fund and we need institutional investors,” Visevic said. “We see this recession [risk] and inflation of course. But our impression so far is that the climate crisis is ever stronger in terms of helping investors decide whether or not to invest in climate technology.”
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.