Cleantech, IOT-focused VC firm Yaletown Partners closes $130M

The funding is the the initial close of their $200M Innovation Growth Fund II (IGF II).

Vancouver-based Yaletown Partners have announced the initial $130 million close of their $200 million Innovation Growth Fund II (IGF II). IGF II seeks to build upon Yaletown's first Innovation Growth Fund (IGF I) and brings the firm’s active funds to over $375 million.

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The prequel: IGF I, also sized at $200 million, closed in 2018 and invested in two main sectors: First, what Yaletown calls the “Intelligent Industry,” businesses that incorporate new technology such as artificial intelligence into industrial processes.
IGF I also focused on the intelligent enterprise sector, where computing platforms and applications increase worker productivity. Investments included Vancouver’s Finn.ai, an AI-powered virtual assistant built for banking.

The sequel: Yaletown’s Canada-wide IGF II sees a similar focus on the digital transformation of industries. The fund is supported by a quartet of organizations:

  • The Public Sector Pension Investment Board

  • BDC Capital

  • Ontario Capital Growth Corporation

  • Alberta Enterprise Corporation

In addition to the focus on the “Intelligent Industry” and Internet of Things companies, cleantech shines through as a focus of IGF II. “We are grateful to our investors who share our belief in, and commitment to, climate-resilient growth generated by ground-breaking technology, for a digitally-led future. We are privileged to invest in Canadian entrepreneurs and technologies that are fundamentally changing the way industries operate around the world to reduce climate impact. Our companies employ over 2,000 people and sell their solutions globally.” said Salil Munjal, Managing Partner at Yaletown.

This was reiterated by Sophie Gupta, Principal & Head of Responsible Investing at Yaletown. “Responsible investing principles have always formed the core of our ethos and it is more important now than ever to ensure that our returns and investing decisions are driven by a commitment to people and the planet. We have long believed, and are proud to demonstrate, that the smart and intentional management of environmental, social and governance (ESG) risks and opportunities is not only complementary to our investment thesis but that it is a driver of excellent execution and results,” she said.

The set: The Vancouver neighbourhood of Yaletown, in addition to bars and converted warehouse lofts, is known for the Yaletown Roundhouse, a century old Canadian Pacific Railway terminus station turned community centre. A launch pad would be a more fitting community centre given the recent VC success. Yaletown, the VC firm, reached superstardom in 2016 when Bit Stew, a local Internet of Things company they backed, was bought by General Electric for $153 million. The CVCA was also bullish on the firm then—not just last April—as they awarded Yaletown 2017 Deal of the Year after the purchase. Recent wins include the $126 million invested in Yaletown portfolio company TaskTop, a Vancouver-based technology firm.

Why it matters: Venture Capital had a huge 2020. In April, Vancouver Tech Journal reported that “despite a pandemic, VC investment in 2020 was the second-highest ever, according to the Canadian Venture Capital & Private Equity Association (CVCA), with $4.4 billion CAD invested across 509 deals in Canada, second only to 2019.” The CVCA highlighted 50 firms that were leading the charge, including Yaletown. The firm has carried this impressive momentum into 2021. 

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