Smaller climate startups face 'valley of death' as funding freezes up. This VC just raised $325 million to help

Venture capital firm World Fund said Friday it's closed a 300 million euro ($325 million) fund to back startups tackling climate change.  

World Fund, a European climate technology investor incubated by the environment-conscious search engine Ecosia, said it had raised the cash despite a challenging environment for technology investing — and, in particular, climate technology investing. 

Investors have reeled from riskier tech-related bets after a jump in inflation and interest rates, which has surged dramatically since the Russia-Ukraine war in 2022. Central banks have hiked rates to stem inflation, which has in turn soured investor sentiment toward tech. 

Danijel Višević, World Fund's founding partner, said that the firm faced a lot of pushback from some institutional investors as it tried to seek commitments for its fund, particularly as the Ukraine war — coupled with the collapse of Silicon Valley Bank in 2023 — complicated matters. 

"They've been like, sorry this is too much, you can't raise 300 million plus," Višević told CNBC.  

Višević said that events like the collapse of SVB and tougher macroeconomic conditions more generally led to a reallocation in investment toward more risk-free assets such as bonds and cash, while stocks and particularly tech stocks saw a retreat. 

Private tech valuations dropped sharply as a result. 

"The private asset market declined, and valuations in the startup ecosystem decreased significantly, so VC and private equity, those valuations we saw in 2021, we did not any more in 2022 and 2023," he added.  

However, Višević noted that World Fund's portfolio remained resilient. 

"We didn't suffer this drop in valuations," he said. "We actually had some up rounds." 

World Fund said it raised the