Venture capital as a whole might be in a bit of a funk, but that’s not true for every investor or sector.
Take Congruent, a climate tech-focused VC: Last week, the firm filed paperwork with the SEC to start raising for a $250 million fund, TechCrunch+ has exclusively learned.
Congruent typically focuses on early-stage investments, so it’s likely that the new fund, the firm’s third, will follow suit. If the team can meet its target, it would be a healthy step up from its most recent early-stage fund, which draws from a $175 million pool.
If the new fund is also targeted at early-stage startups, it suggests that the firm’s partners see potential for a fresh crop of promising climate tech companies to come up over the years. It also suggests that LPs are still bullish about the sector and see strong prospects for growth in the coming decade.
Abe Yokell, one of the firm’s co-founders and managing partners, declined to comment.
Venture capital’s appetite for this space isn’t a surprise. Investors have said that both climate tech and AI are two bright spots in an otherwise dreary venture market. Deals for companies in those sectors have been closing faster than others, they’ve told me.
In fact, investors were instrumental in the creation of Congruent’s last fund. The firm had pulled together a few special-purpose vehicles to satiate its LPs’ desire to support their early-stage investments, and it realized that there was enough appetite out there for a larger offering. The $300 million continuity fund, which the firm said it closed in April, was raised to satiate those investors.
Now that some of Congruent’s first portfolio companies have grown up, it’s only natural that the firm would look to find some new seed and Series A startups to back.
Yokell previously said that the continuity fund was “largely done” when the Inflation Reduction Act was passed.
In the 15 months or so since the law was passed, $350 billion in private capital has been committed to clean power projects, according to the American Clean Power Association. Moreover, announced investments in electric vehicle and battery production have topped $140 billion, according to the Biden administration.
Given that the law runs through 2032, the coming decade is likely to see sustained activity in climate tech. It’s not surprising that investors would want to ride that wave.
Note: This story’s headline was updated to reflect the fact that the firm is raising $250 million, not $300 million.