In one of its biggest ever contributions to a first-time VC fund, the European Investment Fund today confirmed a €50 million cash injection into the climate tech-focused fund World Fund, adding to its over 200 existing LPs including Ecosia and the UK Environment Agency's pension fund.
EIF's investment will go to European World Fund investees, but also has a "partial remit" specifically set aside for two EU markets: Germany and the Netherlands.
Alain Godard, CEO of EIF, said: "The climate tech VC market in Europe is in its infancy, and World Fund stands out as a fund with a strong track record, network, investment hypothesis and experience, as well as scientific and commercial expertise within its founding team.
"These factors, alongside World Fund’s climate performance potential measurement criteria, have convinced us to back their first fund, with the support of the European Commission and we look forward to supporting the next generation of high-growth climate start-ups across the continent.”
World Fund was founded in 2021 and aims to back climate tech startups, but with a crucial performance target. To be eligible, potential portfolio investments must demonstrate they can prevent at least 100 million tons of carbon leakage into the atmosphere.
This "strict criteria" is supposed to help whittle down the climate tech pack, ensuring World Fund backing is explicitly given to genuine climate change solutions. World Fund's investment team uses benchmark climate performance potential metrics for decision making, lending an extra sheen of credibility.
World Fund co-founder Danijel Višević said: "We’re thrilled to have EIF on board as an anchor LP in fund I, alongside the likes of the UK’s Environment Agency pension fund, PwC Germany and Ecosia.
"We see this landmark investment - one of the largest EIF has made in a first-time VC fund - as a strong signal that the European Union is serious about tackling the climate crisis. It will help us continue our mission to back the founders that will deliver decarbonisation at scale.”
To date, some of World Fund's better known investments have included an early-stage bet in Finnish quantum computing pioneer IQM.
Quantum algorithms dial a near-infinite number of switches to make calculations, potentially finding concrete answers to decarbonisation challenges that today have no answers.
Aside from IQM, World Fund's portfolio also includes a precision fermentation platform, Planet A Foods, whose produce is intended to reduce highly consumable threats to the world's rainforests, like cocoa and palm oil.
EIF's LP contribution is being made through its new InvestEU programme, aimed at finding long-term funding for sustainability-aligned business models across Europe. The EIF is also using certain regional "mandates" from the Netherlands (Dutch Future Fund), Germany (ERP Special Fund) and Bavaria's LfA Förderbank Bayern.
It's also part of EIF's mission to fuel SME-led growth across Europe, as well as aiming to bring climate and environment projects up to a 16% share of its overall activity before this year ends, and to one quarter of overall EIF activity by 2024.
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