Investing €300M in climate-tech that can sell to climate deniers - Tim Schumacher (World Fund)

Episode Overview

• This episode features Tim Schumacher, General Partner at WorldFund, who shares his unique investment thesis: backing climate tech so superior in performance or cost that it would appeal even to a climate denier.
• The conversation explores the fundamental principle that climate-positive technologies, such as electric engines and alternative proteins, are inherently more efficient than their carbon-intensive predecessors, creating a powerful economic and environmental alignment.
• Tim details WorldFund's specific investment criteria, including the "Climate Performance Potential" (CPP) metric, which requires startups to have the potential to save at least 100 million tons of CO₂ annually.
• The discussion emphasizes the need for a "green discount" over a "green premium," arguing that for climate solutions to achieve mass adoption, they must be the economically superior choice.

Key Concepts

• "Sell to Climate Deniers" Thesis: The core strategy of investing in climate technologies whose primary value proposition (e.g., cost, efficiency, durability) is so compelling that it stands on its own, independent of its positive environmental impact.
• Inherent Efficiency of Climate Tech: The idea that many climate solutions are fundamentally more efficient from a physics and resource perspective. For example, electric engines are three times more efficient than combustion engines, and alternative proteins are vastly more efficient at converting calories than animal agriculture.
• Climate Performance Potential (CPP): A key investment metric for WorldFund, requiring a company to have the potential to reduce or remove at least 100 million tons of CO₂ equivalent per year. This is assessed with a top-down, "back-of-the-napkin" analysis similar to a TAM calculation.
• Alignment of Impact and Returns: In climate tech investing, financial success and positive climate impact are not a trade-off but are directly linked. Greater efficiency leads to better products, higher profits, and larger emissions reductions.
• The Need for Deep Tech and Hardware: A recognition that solving climate change requires moving beyond software ("bits") to invest in tangible, physical technologies ("atoms") that can decarbonize the real economy.
• "Green Discount" Philosophy: The belief that successful climate products should not rely on a "green premium" but should instead be cheaper or better than incumbent solutions, making the sustainable choice the default economic choice.

Quotes

• At 0:01 - "To me, climate is the most important problem humanity faces." - Tim Schumacher on his personal motivation for focusing on climate technology.
• At 0:22 - "At World Fund, we like to invest into climate tech that you can sell to climate tech deniers..." - Tim Schumacher introduces WorldFund's core investment thesis.
• At 23:31 - "An electric engine is three times as efficient as a combustion engine. And you cannot rule this out." - Tim highlights that the fundamental physical efficiency of certain green technologies makes their eventual market dominance inevitable.
• At 24:06 - "It's probably the most inefficient machine we have ever designed as humans is the animal." - Tim frames animal agriculture as a fundamentally inefficient technology, explaining the opportunity in alternative food systems.
• At 25:15 - "It's actually those two things are totally aligned. And that's the cool thing in investing in climate, is that you actually do both." - Tim explains how financial returns and positive climate impact are directly linked through efficiency.
• At 26:38 - "[A company] can at least reduce or remove 100 million tons of CO2 equivalent every year." - The host asks Tim to elaborate on WorldFund's key "Climate Performance Potential" (CPP) metric.
• At 27:03 - "The early assessment is really a back of the napkin analysis...we look at a technology and we say, okay, if this technology would really be super successful and have 100% of the market, how much would that be?" - Tim describes the simple, top-down methodology for calculating a startup's CPP.
• At 41:37 - "There should be a green discount, not a green premium." - Tim articulates a core belief that for a climate solution to succeed at scale, it must be economically superior to the incumbent technology.
• At 42:00 - "How would you sell your product to a climate denier?" - Tim reveals a key question they pose to founders to test if their product has a compelling value proposition beyond its environmental benefits.

Takeaways

• To build a successful climate company, focus on creating a product that is fundamentally better, cheaper, or more efficient, with the climate benefit as a powerful co-benefit, not the sole selling point.
• Seek out climate solutions where the business model is inherently tied to positive impact; the most scalable companies are those where making more money directly equates to abating more emissions.
• Use ambitious, quantifiable impact metrics as a core filter for investment or entrepreneurial focus to ensure efforts are directed toward solutions with the potential for planetary-scale change.
• Strive to create a "green discount" by making sustainable technologies the more affordable and rational economic choice, which is the key to unlocking mass-market adoption.
• Recognize that solving the climate crisis requires investing in and building companies focused on hardware and deep science, as software alone is insufficient to decarbonize our physical world.