Montreal-based venture studio Diagram is taking a bold step into the climate tech sector with the launch of its ClimateTech Fund. This new initiative comes on the heels of raising an impressive $80 million CAD (approximately $58 million), surpassing its original goal of $60 million CAD ($43 million). As Diagram's first fund dedicated to climate solutions, it signals a significant commitment to addressing pressing environmental challenges through innovative startups.
Diagram has built a reputation for incubating startups by diving deep into various industries to identify critical pain points and customer needs. Amélie Foz-Couture, a partner at Diagram and co-head of the ClimateTech Fund, emphasizes the meticulous process the firm employs. “We spend several months examining a category to ensure the opportunity is thoroughly validated before bringing on founding teams,” she explained. This rigorous approach ensures that only the most promising ideas evolve into viable companies.
Once opportunities are validated, Diagram provides essential resources to the startups, including capital comparable to a pre-seed round, connections to potential customers, and preliminary product wireframes. Although Diagram maintains a supportive relationship with these companies, they operate similarly to traditional investor-portfolio dynamics, allowing startups the autonomy to develop their vision.
With increasing interest from limited partners (LPs) in climate technology, Diagram is well-positioned to capitalize on this momentum. The firm has garnered support from various investors, including its parent company, Sagard, and government-backed initiatives like Investissement Quebec and BDC Capital. Notably, despite some challenges in the fundraising landscape, climate-focused venture capital firms set a fundraising record in 2022, attracting $18.7 billion across 64 funds.
Paul Manias, another partner at Diagram and co-head of the climate fund, highlighted the firm’s strategic focus on building capital-efficient digital solutions across multiple climate categories, such as electric vehicles, biodiversity, and sustainable agriculture. He noted, “We see immense potential in climate software, as it complements our venture model more effectively than deep tech projects.”
As Diagram kicks off its new climate initiative, it has already begun developing two startups under its climate thesis. The first, Relion, specializes in operational and maintenance solutions for EV charging infrastructure and recently secured $3 million in seed funding led by Diagram. The second venture, Lyteflo, focuses on enhancing electric vehicle sales through innovative battery life solutions.
Founded in 2016 as the early-stage venture arm of Sagard, Diagram has successfully managed over $400 million in assets, launching 25 companies across sectors such as fintech and web3, and achieving four successful exits. With its new ClimateTech Fund, Diagram is poised to make a significant impact in the climate tech landscape, fostering innovative solutions that tackle some of the most pressing environmental issues we face today.
