It’s been a somber news cycle for startups and venture capital in recent months. But there are bright spots where investors and companies are working to solve some of the world’s key challenges—chief among them, climate change. I recently chatted with one climate-focused venture partner, whose fund is armed with fresh capital, about the technologies he believes are both “cool” and critical to fund in 2023 and beyond.
Craig Douglas, a founding partner at World Fund, a climate tech fund based in Berlin, told me he sees huge promise in everything from alternative proteins to direct air capture solutions.
World Fund launched in late 2021 with a target to raise €350 million (a little less than $370 million). And on Wednesday, they announced a new €50 million in that pool from the European Investment Fund (EIF), a big Europe-based investor that will be an anchor LP in the fund. “They’re making one of their largest ever commitments to a first time fund with us,” Douglas told me last week, adding that with this latest commitment, they’ve raised “a significant proportion of the fund.” Other backers of World Fund include the U.K.’s Environment Agency pension fund, PwC Germany, and the fund’s incubator, Ecosia, a search engine that plants trees.
World Fund only invests in European startups whose businesses have the potential to save at least 100 megatons of CO2 equivalent per year. And according to Douglas, climate-friendly alternatives to protein could be one of the most interesting spaces moving forward. “How do you actually scale up and…deliver large quantities of protein in a way that you might not have thought was possible before?…You can do it at cost points that are way below what the market is used to,” he says. There, he’s interested in alternative proteins using fermentation and mycelium-based mycoproteins (think fungus). But instead of startups catering directly to consumers, Douglas says he’s more interested in ingredients, focusing on technologies that can enable large-scale protein production “well below the cost of chicken” and in a more CO2-friendly way, he says. (They’ve already invested in one plant-based protein startup, Juicy Marbles.)
Apart from protein, Douglas is eager to put World Fund’s capital to work in direct air carbon capture, an increasingly hot group of technologies that, as the name suggests, can capture carbon emissions directly from the air. Compared to something like carbon credits to offset emissions, “if you want to be credible, the easiest way to do that is to take it out of the air, and people are willing to pay a large amount of money to be able to do that,” notes Douglas. He believes there are some innovative solutions, and says the fund is in “ongoing” talks with several companies. They’re looking into different technologies, says Douglas, whether it’s using minerals, an example of which is Heirloom, a startup based in the U.S., or using algae, like U.K.-based Brilliant Planet.
In terms of what could be the most impactful in lowering harmful emissions, Douglas highlights “linking sustainable agriculture to carbon markets, because if you can do that effectively, it’s by far the lowest cost” in terms of the amount of cost per ton of CO2 saved. Douglas told me regenerative farming is a really critical area given a hefty portion of global emissions comes from agriculture. The problem with investing, though, is finding business models that can function on a “large scale in multiple markets,” he notes. “Company-wise,” he says, “there’s no one that’s actually been able to crack it,” yet. Douglas says the fund has looked at several companies in the space earlier this year, and that “We’re constantly monitoring this on an active basis.” But he expects to see “big changes” in agricultural policy moving forward that could help propel the market.
A more developed area Douglas is eyeing is companies that help reduce the carbon emissions of commercial buildings. Though it’s “early days in that sector,” he points to France-based Deepki, a software platform that focuses on helping real estate investors and owners lower emissions, as a successful example. “No one’s really proved scalability, but they’re the first ones to really have actually done it,” he notes. Since Deepki is too late stage for World Fund to invest in (they invest from seed up to Series B), Douglas says companies that follow a similar model could be “very interesting.”
It’s clear many of these areas within climate tech are still early in terms of the number of viable business models for VCs to invest in, but Douglas still expects an upward trend in 2023: “I think you’ll see more and more VCs entering the space.”
See you tomorrow,
Anne Sraders
Twitter:@AnneSraders
Email: anne.sraders@fortune.com
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VENTURE DEALS
- Runway ML, a New York-based creation suite for content editing, raised $50 million in Series C funding. Felicis Ventures led the round and was joined by investors including MadronaVentures, Amplify Partners, Coatue, Compound, and Lux Capital.
- Setpoint, an Austin-based fintech platform for asset-backed lending, raised $43 million in Series A funding. Andreessen Horowitz led the round and was joined by investors including Stonecroft, 75andSunny, Fifth Wall, 645 Ventures, NextView Ventures, LiveOak Venture Partners, Vesta Ventures, and ATX Venture Partners.
- GameOn Technology, a San Francisco-based chat platform for sports teams and fans, raised $35 million in Series B funding co-led by Mirae Asset Venture Investment, Mighty Capital, and B3Capital.
- Chattermill, a London-based customer intelligence platform, raised $26 million in Series B funding. Beringea led the round and was joined by investors including DN Capital, Ventech, Runa Capital, btov Partners, SVB, and Blossom Street Ventures.
- OMNY Health, an Atlanta-based compliant data and platform solutions company, raised $17 million in Series B funding led by Chicago Pacific Founders.
- Expeto, a Vancouver-based mobile networking platform, raised $12 million in Series B funding. Sorenson Capital led the round and was joined by investors including 5G Open Innovation Lab, Samsung Next, and Mistral Venture Partners.
- Infinimmune, a San Francisco-based antibody drug discovery and development company, raised $12 million in seed funding. Playground Global led the round and was joined by investors including Pear VC, Civilization Ventures, Axial VC, and other angels.
- Cacheflow, a Los Altos, Calif.-based SaaS sales platform, raised $10 million in funding. GV led the round and was joined by investors including GGV and Pelion Ventures.
- Flow Engineering, a London-based collaboration platform for hardware engineering teams, raised $8.5 million in seed funding. EQT Ventures led the round and was joined by investors including Backed VC and other angels.
- Protopia AI, an Austin-based data transformation company, raised $6 million in seed funding. ATX Venture Partners led the round and was joined by investors including Galaxy Interactive, Silverton Partners, and DNX Ventures.
- Turtle Health, a Boston-based at-home/virtual fertility clinic, raised $5.4 million in funding. Switch Ventures, Blue Seed Collective, NextGen Venture Partners, Mayo Clinic Ventures, and US Fertility invested in the round.
- Accacia, a Gurugram, India-based decarbonisation platform, raised $2.5 million in seed funding. Accel and B Capital co-led the round and were joined by investors including Blume Ventures, GoodCapital, Rainmatter Fund, Loyal VC, and other angels.
- ImVitro, a Paris-based IVF fertility imaging B2B SaaS platform, raised $2.5 million in seed funding. LDV Capital led the round and was joined by investors including MMC Ventures, TinyVC, Fly Ventures, and Compound VC.
- Enthea, a Boston-based psychedelic healthcare insurance provider, raised $2 million in seed funding led by Tabula Rasa Ventures.
PRIVATE EQUITY
- ACA Group, owned by Genstar Capital acquired Advanced Regulatory Compliance, a Beverly Hills, Calif.-based regulatory compliance solutions provider for the financial services community. Financial terms were not disclosed.
- Mercer Global Advisors, majority owned by Oak Hill Capital and Genstar Capital, acquired Vintage Financial Services, an Ann Arbor, Mich.-based wealth management firm. Financial terms were not disclosed.
- Millstone Medical Outsourcing, an Arlington Capital Partners portfolio company, acquired Ethide Laboratories, a West Warwick, R.I.-based contract testing services company. Financial terms were not disclosed.
- Silversmith Capital Partners acquired a majority stake in Proven Optics, a Columbus, Ohio-based financial management software company. Financial terms were not disclosed.
- Tiger Infrastructure Partners acquiredInternational Aerospace Coatings, a Shannon, Ireland and Irvine, Calif.-based aircraft painting and aviation services company. Financial terms were not disclosed.
OTHER
- NRG Energy agreed to acquire Vivint Smart Home, a Provo, Utah-based smart thermostats, locks, lights, and other household devices seller, for $2.8 billion.
- Kroll acquired Appraisal & Valuation Consultants, a London-based oil, gas, petrochemical, chemical, power, mining, metals processing, and offshore facilities valuation firm. Financial terms were not disclosed.
- NMI acquired Agreement Express, a Vancouver-based underwriting and onboarding SaaS provider for financial services companies. Financial terms were not disclosed.
IPOS
- VinFast Auto, the Hai Phong, Vietnam-based electric vehicle manufacturing unit of Vingroup, filed for an initial public offering.
FUNDS + FUNDS OF FUNDS
- BlackRock Alternatives, the New York-based alternative investment arm of BlackRock, raised €415 million ($434.53) for a fund focused on private infrastructure projects.
- 645 Ventures, a New York and San Francisco-based venture capital firm, raised $347 million across two funds. $194.5 million was raised for their fourth fund to invest in seed to Series A rounds. $153 million was raised to write later stage checks up to $15 million.
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