German VC World Fund emerged from stealth in 2021 as Europe’s largest climate fund, targeting €350m to back the continent’s burgeoning climate tech scene.
Today, it’s announcing the final close of that fund, at €300m — in a very different investment environment to the one it started out in.
LPs announced today include Croatian pension fund Erste Plavi, Bpifrance, and the foundation established by the founder of Haribo, Dr. Hans Riegel-Stiftung. Previously announced LPs include the European Investment Fund (EIF), search engine Ecosia and the UK’s Environment Agency.
The fundraising journey
“Usually, raising a first-time fund takes 3-4 years on average, whereas we spent 2.5-3 years raising this fund,” says Danijel Višević, founder of World Fund.
“At the start, it was of course hard to get the first investors on board — that’s always the biggest challenge for first-time funds,” he says. Things picked up once the EIF and the UK’s Environment Agency got on board, Višević says.
“Then Silicon Valley Bank collapsed, interest rates were rising sharply and the market turned from an alternative assets market to a bond market. This all combined to make 2023 the hardest year for VC fundraising in years,” he says.
Venture fundraising declined by nearly 60% in 2023 to its lowest total since 2015, according to figures from McKinsey.
The climate tech market in 2024
In the years since World Fund started fundraising, more and more specialist climate funds have popped up. It’s an increasingly buzzy area of the market — and an influx of new funds could mean more competition to get onto the best company’s cap tables.
But, says Višević, “there are more and more great companies that need capital and less competition on our side.”
The sector’s buoyed on, he says, by the fact that it didn't experience the “FOMO bubble” other parts of the market saw in 2021, leading to frothy valuations.
That said, there’s a significant funding gap at Series B stage for climate tech, Višević says — something World Fund hopes to help remedy through follow-on rounds.
The portfolio
World Fund has deployed €100m so far, backing 15 companies.
They include quantum computing startup IQM — which is working on applying quantum computing to climate problems like organising renewable energy grid — alongside foodtech startup Enough, built environment startup Ecoworks and, most recently, direct air capture startup Mission Zero.
The fund plans to make another 10-15 investments over the next two years, as well as follow-on rounds into the existing portfolio companies.
