Activate joins fundraising bonanza for climate funds

The San Francisco-based firm is the seventh VC to raise or announce new climate fund in the past four months.

Activate Capital Partners, a climate tech venture and growth equity firm, has closed its second fund on $500 million, $200 million above its target and three times larger than its first fund.

Activate Capital Fund II was backed by 30 institutional investors, with commitments from “limited partners from across the US, Europe and South America, including foundations, sovereign wealth funds, pension funds, family offices, strategic investors and funds of funds,” according to a statement.

The San Francisco-based firm closed on $157.3 million for its first fund in 2018, with commitments from Alaska Permanent Fund, Environment Agency Pension Fund and Texas Municipal Retirement System, according to PitchBook.

Activate set a target of $300 million when it started fundraising for Fund II in October 2021, a regulatory filing shows. Brooklands Capital Strategies and TAG Advisers Ltd acted as placement agents.

“When we started the firm, we set out with a vision of the world that was clean, connected, intelligent and sustainable. All of our new investors share our view, and we are thrilled to have brought on board such a terrific group of partners in Fund II,” Raj Atluru, co-founder and managing partner, said in a statement.

Activate invests in companies addressing climate change holistically, across technology led transitions in energy, transportation, logistics, cybersecurity and industrial systems. Its portfolio includes Generate Capital, Stem, Flexe, Volta and PosiGen.

Activate was founded in 2017 by veteran cleantech investors Atluru, Anup Jacob and David Lincoln, who continue as managing partners. Atluru previously co-founded and was managing director of Silver Lake Kraftwerk, Jacob was previously a founder and partner at sovereign wealth fund Mubadala Capital and Lincoln previously founded and was managing partner of Element Partners.

Climate club

Activate joins a growing list of managers with new climate funds. One or more new climate funds have made the news in each of the past four months:

  • In September, Energy Impact Partners closed a €390 million European fund targeting climate investments, with commitments from APG, the Abu Dhabi Investment Authority and Microsoft.
  • In August, Contrarian Ventures, a European seed-stage climate tech venture firm, reported that it held a “significant first closing” toward a €100 million for its second fund.
  • Also in August, Buoyant Ventures of Chicago closed on more than $50 million toward a $100 million climate fund.
  • In July, Fifth Wall, a Los Angeles proptech investor, raised $500 million for its inaugural climate fund.
  • Also in July, the Oregon State Treasury committed $20 million to USV Climate 2022, a the second climate offering from Union Square Ventures, which is targeting $200 million.
  • In June, World Fund told Venture Capital Journal that it secured an undisclosed commitment from PwC Germany, and the Berlin-based firm aims to close on a €350 million climate-focused fund by the beginning of next year.