Climate Insider Brief:
- Despite a general venture slowdown affecting school endowments, Congruent Ventures successfully raised $275 million for its third flagship fund, attracting a new school endowment from Northwestern University.
- The $275 million fund represents a substantial step-up from Congruent’s previous fund, which closed at $175 million in 2021.
- Congruent’s fund, one of the largest dedicated to climate investments in 2023, aligns with the increasing focus on environmental, social, and governance (ESG) commitments within the investment landscape.
PRESS RELEASE – December 07, 2023 – School endowments have been almost universally burned by the venture slowdown this year. Across the board, these LPs have slowed down new commitments to the asset class until the IPO window reopens and allows money to flow back into their coffers.
But Congruent Ventures still managed to reel in a new school endowment, Northwestern University, on top of its existing LPs—which include the University of California—for its third flagship fund.
According to managing partner Abe Yokell, Congruent declined over $300 million in excess LP interest in the vehicle, which at $275 million is still a significant step-up from Fund II, which closed in 2021 on $175 million. The firm, which specializes in early-stage deals in climate-tech companies, raised $300 million for a continuity fund in April. Congruent’s LP base is made up of mostly pension funds, $10 billion-plus family offices, foundations and endowments.
“There were very few university endowments not going through a reset on venture,” Yokell said. “The typical conversation [with LPs] was ‘we’re paring back existing relationships, we’re not making any new commitments, and the only area that we are considering making new investments in is climate.'”
He said school endowments are still interested in climate-tech funds because they have the deepest scars from when the cleantech bubble burst in 2011 and wiped out billions in venture dollars. The flurry of bankruptcies and the valuation collapse throughout much of cleantech in the early 2010s, often dubbed CleanTech 1.0, caused endowments to pare down their pace of investing in climate tech, leaving them underexposed to climate startups even as they were overexposed to VC.
Investing in climate-dedicated vehicles can also serve an endowment’s ESG commitments or mandate: Harvard University, for example, has committed to making its endowment net-zero for greenhouse gas emissions by 2050. By putting its assets in vehicles targeting companies with net-positive emissions impacts, an endowment can reach such goals more quickly.
Congruent’s fund is one of the largest VC funds dedicated to or focused on climate investments to close in 2023, behind ones like At One Ventures’ $375 million Fund II and LG Technology’s $309 million Energy Transition Fund.
“I don’t think that we’ve run across any top-tier university endowments [that aren’t] landscaping and/or making commitments [in climate tech],” Yokell said.
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SOURCE: PitchBook
Featured Image: Source: Congruent Ventures
