World Fund on track for debut climate tech fund final close in 2023

World Fund’s first vehicle has a EUR 350m target and was launched in October 2021, according to Unquote Data. The firm is headquartered in Germany and invests in European startups that are developing technology to mitigate the climate crisis.

“We’re aiming for a final close in 2023 but I would not name a specific date,” Višević said. “We do see funds waiting for new LP allocations, and some institutional LPs are waiting for others to come in before they commit just ahead of the final close – this is the reason why many funds become oversubscribed as too many LPs wait until a certain threshold has passed.”

The fund could reach its hard-cap of EUR 400m, Višević added, but the VC has enough capital to invest for now.

Venture capital is in “crisis mode” in terms of valuations, Višević noted, with investments halving in value in the US and remaining a third down in Europe versus last year.

In spite of this, the performance of climate technology valuations versus the rest of the market has remained more stable, he said. “There was no climate tech bubble, unlike in areas like quick commerce, crypto or fintech, and it has been disproportionately underfunded,” he said. “At the same time, the climate crisis is accelerating, and the need for solutions will increase.”

LPs are aware of this dynamic, he said. “They were very hesitant at the beginning of March following the outbreak of war, with inflation as the main problem. But now we’re seeing some LPs shifting away from VC to our strategy, including insurance, banks, and funds-of-funds,” he said.

The fund has recent received a “big-ticket investment” from a large European institutional LP, Višević added, noting that the commitment is a strong sign of their confidence in World Fund. The LP doubled the amount that they had initially intended to commit after 14 months of due diligence, he added.

Standing out
With many managers currently on the road for climate impact vehicles, World Fund has set out clear impact targets and differentiation criteria to convince LPs of the merits of its strategy. “We make every investment dependent on the climate performance potential, aiming for a 100 megaton reduction in CO2 emissions by 2040 at the latest – this is the most important KPI for us and it is also a financial one,” Višević said.

The background of its investment team also makes the firm stand out, according to Višević. Its team members have expertise in science (namely physics and chemistry), engineering and mathematics, as well as in private equity, he noted, adding that this allows the firm to have a comprehensive understanding of the technology that it is investing in. The firm’s founding partners are Višević, entrepreneur Tim Schumacher, Daria Saharova and Craig Douglas, all of whom have experience in venture capital investing across a range of sectors.

In addition, World Fund’s capacity to do follow-on work and follow-on investment is a differentiating factor, Višević said. The firm can deploy EUR 1m-15m tickets initially, with up to EUR 45m available per company.

Portfolio development
World Fund currently has six investments in its portfolio, according to its website. It plans to continue to address the climate technology funding gap and to invest alongside generalist investors as its develops its portfolio.

“Many climate tech startups did not get the funding that they needed before and VC teams did not have the scientific background needed to understand the technology,” Višević said. We often invest in hardware, and this usually takes longer to generate profit than software.” The firm has now invested alongside generalist VCs including Cherry Ventures and EQT, with World Fund performing the climate and technology due diligence on these investments. “[Generalist VCs] bank on this, and we are banking on their names and their expertise, too,” he said.

Višević sees three potential exit options as the investments in its portfolio mature. ”I could imagine companies like IQM needing an IPO in a few years’ time,” he said, highlighting the firm’s investment in the Finland-headquartered climate crisis and sustainable development-focused quantum computing startup. World Fund led a EUR 128m Series A2 round for the business in July 2022, joined by around 15 other investors.

Selling to PE and later-stage funds is also an option, but they are only really present in North America, he said, citing Brookfield, General Atlantic and KKR. Corporate buyers will also be an option, he said, given that they always have an interest in taking over teams and proven technology.

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