Ecosia launches World Fund to back climate tech founders
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KONYA TURKEY, SEPTEMBER 13, 2018. Rows of panels can be seen at the Tekno Ray Solarfarm in Konya on September 13, 2018, Turkey. Turkey intends to have 30% of its electricity come from renewable sources by 2023 in order to lessen dependence on imported energy from Iran, Russia, and Iraq. Turkey is the country with the highest solar energy potential, averaging 7.2 hours of sunlight per day. This is due to its geographical position. Photo by Chris McGrath/Getty Images
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Ecosia is a search engine which uses its advertising revenue to plant trees. It has created a venture capital fund of 350 million euros (405 million dollars) that focuses on climate change.
Ecosia stated that the so-called World Fund would invest in “next generation” of founders who are looking at the problem and will be measured on both “climate returns”, as well as financial returns.
Christian Kroll, CEO of Ecosia told CNBC that the goal was to end climate change. This statement came just days ahead of the COP26 summit.
Kroll stated that Ecosia has been planting trees for many years and that it had planted over 136 million trees. But that won’t solve the problem of climate change.
Ecosia has 15 million active monthly users. It expects to make annual revenues this year of 25 million euros (about $29.9 million). However, its user base is smaller than Google’s, with billions.
Kroll claimed Ecosia has “extremely good connections to many climate start ups”, however, it isn’t able to support them financially with the search engine’s money.
He said, “Our promise is to our users that if we search for you, we will use the money to plant trees.” It wouldn’t go down so well if we used it to fund risky start-ups that don’t succeed.
This issue could be solved by setting up a separate VC funds that sources capital from other sources.
Bill Gates is the co-founder and billionaire of Microsoft. He stated in an interview on Wednesday climate tech will produce eight to 10 Teslas, a Google, an Amazon and a Microsoft.They are the people of Ecosia has a similar opinion, and believes that those who enable decarbonization will be the most profitable companies in the future.
Carbon emissions can be reduced
Ecosia stated that more than half the World Fund funding has been already committed by large organizations and entrepreneurs. The fund also made three additional investments, which are still to be disclosed.
Danijel Visevic of Ecosia’s investments department and the head of World Fund, said that “we have invested in plant-based meats companies revolutionizing the top end of the market” and that they also own a company to replace cocoa.
Global Fund funds around 40 “growth” and early-stage companies.
A key point to remember is that the World Fund must invest in companies that contribute significantly to carbon dioxide reductions. The Fund invests only in companies with the potential to eliminate 100 megatons per year of carbon dioxide from the atmosphere.
Craig Douglas, World Fund Partner and CNBC’s Craig Douglas said that everything comes back to the same figure regardless of technology.
According to the World Fund, it plans to support carbon-cutting businesses in agriculture and food production as well as transportation and the built environment.
Ecosia says that the World Fund has the highest number of European counterparts, while Gates’ Breakthrough Ventures holds the record for the most expensive at $2B.
Global climate tech VC investment has soared from $6.6 billion in 2016 to $32.3 billion in 2021 so far, an increase in funding by almost five times, according to a report from promo agency London & Partners and VC analysis firm Dealroom.co.
The traditional VC industry was reluctant to invest heavily in climate technology start-ups. Dara Saharova is a general partner at World Fund. Dara said companies that have been founded between 2008 & 2013 now have around $800 million in market value.
Douglas stated that “In Europe there are a lot people who invest $1million to $5million, and there are some large institutions who will put in, you know, $30 million or more per company.” But there is virtually none in the middle. The World Fund was created to fill the gap, he said.
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