Toronto-based ArcTern Ventures has secured $450 million CAD ($335 million USD) in commitments for its third climate technology fund.
This makes ArcTern Fund III more than double the size of the venture capital (VC) firm’s second fund. ArcTern has claimed that these commitments exceed its $300-million USD Fund III target, but reporting from The Globe and Mail indicates that ArcTern was initially planning to raise up to $400 million USD. Regardless, this is a significant amount, especially in today’s challenging fundraising environment.
Fund III’s limited partners include TD Bank Group, Allianz, Church Pension Group, OPTrust, Credit Suisse Asset Management, and other large, undisclosed institutional investors.
These commitments make Fund III more than double the size of ArcTern’s second fund.
ArcTern’s third fund will focus on “early growth-stage” companies across North America and Europe at the Series A and Series B levels that are developing solutions capable of reducing emissions in fields like renewable energy, clean mobility, the circular economy, sustainable food, and agriculture and industrial decarbonization.
In a statement, ArcTern co-founder and managing partner Murray McCaig argued that “the world needs scaleable decarbonization solutions today, not decades into the future.”
ArcTern was founded in 2012 on the premise that transitioning to a carbon-neutral economy “will disrupt all industries and present an unprecedented opportunity for outsized financial returns.”
Formerly the MaRS Cleantech Fund, ArcTern is part of a group of Toronto-based VC funds that have come out of MaRS, alongside Amplify Capital, StandUp Ventures, and Graphite Ventures.
Today, ArcTern represents one of the world’s largest dedicated climate tech VC funds. Headquartered in Toronto, ArcTern also has offices in Oslo, Norway and San Francisco.
The VC firm’s Canadian portfolio includes Vancouver’s Clir Renewables, Toronto-based discounted food marketplace Flashfood, Toronto energy storage company Hydrostor, and Vancouver-based AgTech firm Terramera.
ArcTern Fund III marks the latest in a series of new cleantech-focused Canadian VC funds that have been announced in the past few months. Other firms to launch new funds since November include Diagram Ventures, Active Impact Investments—which like ArcTern, is also on its third climate tech-focused fund—and Spring Impact Capital.
Per Crunchbase, Canada moved up the global cleantech ranks in 2023. Cleantech incentives rolled out by the Government of Canada and the United States have been positive news for the ecosystem. However, startups in the space have not been immune from current market conditions, and the recent Sustainable Development Technology Canada funding pause has made things more difficult for early-stage cleantech companies across the country.
Feature image courtesy Unsplash. Photo by Appolinary Kalashnikova.
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