Ecosia launches Global Fund to support founders of climate technology

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KONYA, TURKEY – SEPTEMBER 13: Rows of solar panels are seen at a Tekno Ray solar farm on September 13, 2018 in Konya, Turkey. By 2023, Turkey plans to produce 30% of its electricity from renewable sources with the aim of reducing its dependence on energy imports from Iran, Russia and Iraq. Due to its geographical location, Turkey has the second largest solar energy potential in Europe with an average of 7.2 hours of sunshine per day. (Photo by Chris McGrath / Getty Images)

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

The so-called Global Fund will invest in the “next generation” of founders looking to tackle the problem, Ecosia said, and will measure its success on “climate returns” as well as financial returns.

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

“We’ve been doing this at Ecosia for a long time by planting trees,” said Kroll, adding that the company has planted 136 million trees so far. “But that alone will not be enough to solve climate change.”

Research released Tuesday shows climate tech startups have raised more money so far this year than they have in any other year, with $ 32 billion pumped into startups. ups fighting global climate change since the start of 2021.

The Ecosia search engine has 15 million monthly active users and it forecasts annual revenue of 25 million euros ($ 29 million) this year. The size of its user base, however, is paltry compared to Google, which has billions of users.

Kroll said Ecosia is “extremely well connected to a lot of climate start-ups,” but is unable to support them with the money it generates through its search engine.

“Our promise to our users is that if you do research with us, we will use the money for tree planting,” he said. “If we were to put this in risky start-ups and it didn’t work, then it wouldn’t be so well received.”

He hopes setting up 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 Wednesday that climate technology will produce eight to 10 Teslas, one Google, one Amazon and one Microsoft. People at Ecosia takes a similar view, believing that the most valuable companies of the next decade will be those that enable a carbon-free world.

Reduce carbon emissions

More than half of the Global Fund’s funding has already been committed by 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 plant-based meats company that is revolutionizing the high end of the market and a cocoa replacement company that reduces deforestation,” said Danijel Visevic, investment manager at Ecosia and head of the Global Fund.

In total, the Global Fund will be used to support around 40 start-up and “growth” companies.

An 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 potential to remove 100 megatonnes of carbon dioxide from the atmosphere each year.

“It all comes down to that number, whatever the technology,” Global Fund partner Craig Douglas told CNBC.

The Global Fund has said it will seek to support companies that reduce their carbon emissions in the food and agriculture, transport and “built environment” sectors, among others.

Ecosia claims the Global Fund is the largest of its kind in Europe, while the largest in the world is managed by Gates’ Breakthrough Ventures and stands at $ 2 billion.

Global venture capital investment in climate technology has grown from $ 6.6 billion in 2016 to $ 32.3 billion in 2021 so far, an increase in funding of nearly five times, report says promotion agency London & Partners and venture capital analysis firm Dealroom.co.

The venture capital industry has traditionally been somewhat reluctant to invest in climate technology start-ups, but Dara Saharova, general partner of World Fund, said companies in the sector founded between 2008 and 2013 now have capitalization about $ 800 billion.

“In Europe there are a lot of people investing $ 1 million to $ 5 million, and now there are big institutions that are ready to invest, you know over $ 30 million per company,” Douglas said. “But there is hardly anyone in between.” He added that the Global Fund was created to bridge the gap.


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