Ecosia launches World Fund to back climate tech founders

KONYA, TURKEY – SEPTEMBER 13: Rows of solar panels are seen at the Tekno Ray solar farm on September 13, 2018 in Konya, Turkey. By 2023, Turkey plans to generate thirty percent of its electricity from renewable sources with the aim of reducing dependence on energy imports from Iran, Russia and Iraq. Due to its geographical location, Turkey has the second largest solar potential in Europe with an average of 7.2 hours of sunshine per day. (Photo by Chris McGrath/Getty Images)

Chris McGrath | Getty Images

Ecosia, the search engine that uses its ad revenue to grow trees, has launched a €350 million ($405 million) venture capital fund focused on the climate crisis.

Ecosia said the so-called global fund would invest in the “next generation” of founders looking to tackle the issue, and would measure its success on the basis of “climate returns” as well as financial returns.

“Our goal is to solve the problem of climate change,” Ecosia CEO Christian Kroll told CNBC ahead of Tuesday’s launch, just days before the COP26 climate summit.

“We have done that in Ecosia a long time ago by planting trees,” Kroll said, adding that the company has planted 136 million trees so far. “But that alone will not be enough to solve the problem of climate change.”

Ecosia search engine has 15 million monthly active users and is expected to report annual revenue of €25 million ($29 million) this year. However, the size of its user base pales in comparison to Google, which has billions of users.

Kroll said Ecosia is “very well connected to many climate startups” but is unable to support them with the money it generates through its search engine.

“We promised our users that if you search with us, we use the money to plant trees,” he said. “If we put that into risky startups, and then it doesn’t work out, it won’t be well received.”

He hopes that creating a separate venture capital fund that raises capital from alternative sources will help eliminate this problem.

Bill Gates, the billionaire co-founder of Microsoft, said in an interview broadcast on Wednesday that climate technology will produce eight to 10 Tesla, Google, Amazon and Microsoft. people in Ecosia has a similar view, believing that the most valuable companies in the next decade will be the ones that enable a carbon world.

Reducing carbon emissions

More than half of the global fund’s funding has already been allocated from entrepreneurs and large institutions, Ecosia said, adding that the fund has made three investments that have yet to be announced.

“We have invested in a vegan meat company that has revolutionized the top market and a cocoa substitution company that is working to reduce deforestation,” said Daniel Visewicz, Head of Investments at Ecosia and Head of Global Fund.

In total, the Global Fund will be used to support about 40 companies in their early and “growth” stage.

One important caveat to note is that every company in which the Global Fund invests must contribute to a significant reduction in carbon dioxide emissions. Specifically, the fund will only invest in companies that have the capacity to remove 100 megatons of carbon dioxide each year from the atmosphere.

“It all comes back to that number, no matter what the technology is,” global fund partner Craig Douglas told CNBC.

The global fund said it would consider supporting carbon-reducing companies in food, agriculture, transportation and the “built environment”, among other things.

Ecosia claims the global fund is the largest of its kind in Europe, while the world’s largest is managed by Gates’ Breakthrough Ventures and is worth $2 billion.

Venture capital investment in global climate technology has increased from $6.6 billion in 2016 to $32.3 billion in 2021 so far, a nearly fivefold increase in funding, according to a report from promotions agency London & Partners and Dealroom. co for analysis.

The VC industry has always been somewhat reluctant to invest in climate tech startups, but Dara Saharova, general partner at the global fund, said companies in the sector established between 2008 and 2013 now have a market cap of about 800 billion. dollar.

“In Europe, there are a lot of people who are investing $1 million to $5 million, and there are some big institutions that are now willing to invest, you know $30 million plus per company,” Douglas said. “But there is no one in the middle.” He added that the Global Fund was created to fill the gap.

.

Leave a Comment