New LP commitment has World Fund seeing blue skies ahead

World Fund has added PwC as an anchor LP and plans to announce a third anchor investor later this year, partner Craig Douglas told Venture Capital Journal.

World Fund, climate tech
World Fund founding partners (from left): Danijel Visevic, Craig Douglas, Daria Saharova and Tim Schumacher

Climate tech VC in Europe got a boost recently with PwC Germany committing an undisclosed amount to the World Fund, which aims to close on €350 million by the beginning of next year.

PwC is now an anchor LP in the fund, along with Ecosia, the tree-planting search engine add-on, and a third anchor investor who will be announced later this year, Craig Douglas, one of World Fund’s four founding partners, told Venture Capital Journal.

Other LPs of note include Mario Götze, the German soccer player; Trivago co-founder Rolf Schrömgens; Econos, a German sustainable investing platform; and Verena and Philipp Pausder, founders of the Fox & Sheep kids app and Thermondo energy company, respectively.

World Fund intends to fill two significant investment gaps in European climate tech: when technology advances from the lab to market – typically funded by seed and Series A rounds – and when the technology leaves the pilot stage to scale up, which is funded at the Series B round. World Fund invests in seed to Series B stages, writing checks of €1 million to €10 million per company.

The fund invests only in European companies, with the aim of catching up to US climate tech funding. US climate tech companies raised $56.6 billion in 2021 compared to $18.3 billion for their European counterparts, according to World Fund.

Slower pace

Global early-stage VC deal activity in the climate tech space has dropped off considerably since the fourth quarter of 2021, when PitchBook recorded 84 deals worth $4.4 billion. Those figures dropped to 79 deals and $2.1 billion in the first quarter of 2022, then to 22 deals for $400 million in the second quarter through June 14, PitchBook reported.

Overall global VC deal activity in climate tech reached new heights in 2021 with 1,229 deals worth $44.3 billion, compared to 858 deals worth $22.1 billion in 2020, PitchBook pointed out. The upward trend since 2012 for total deals and deal value per year seems to be threatened in 2022, with only 384 deals worth $14.8 billion recorded through June 14.

The decline in dealmaking has not translated into declining interest from investors in World Fund.

“Despite the market sell-off, we have not seen any slowdown in LP/investor interest over the last three months or so,” Douglas said. “If anything, LP interest is stronger than ever, as LPs are looking for safe harbors in the economic storm. Climate tech is most certainly a safe harbor and VC has proven in the past to be a crisis-effective asset class.”

Since 2021, World Fund has invested in six deals, which are performing at 1.5 times gross multiple of invested capital (MOIC). Portfolio companies include QOA, which produces an alternative cocoa; Space Forge, a European space tech start-up looking to develop the world’s first returnable satellite that would produce materials that are impossible to manufacture on Earth; and Juicy Marbles, which is developing plant-based filet mignon. World Fund requires each company it invests in to aim to reduce carbon dioxide emissions by 100 megatons per year.

The CO2-reducing investment criteria is also good for returns, because start-ups that can deliver will be the most valuable companies of the next decade, Douglas said. He points to a seven-year study by Right Based On Science showing that European stocks aligned with the goals of the Paris climate agreement have outperformed the market.