Diagram, a Montreal-based venture studio known for its success in building startups in-house, is making its first foray into climate technology. The studio has announced the close of its fourth fund, the Diagram Climate Tech Fund, after raising CAD $80 million (USD $58 million), well above its original target of CAD $60 million (USD $43 million). This fund marks Diagram’s first dedicated investment vehicle focused exclusively on climate-focused ventures.
Founded eight years ago, Diagram has gained a reputation for its systematic approach to launching startups, first identifying core industry pain points and customer needs before hand-picking founders to lead solutions. This rigorous model is now being adapted for climate tech, an area increasingly prioritized by Diagram’s investors and leadership alike. “There’s a high bar for what becomes a company,” said Amélie Foz-Couture, Diagram partner and co-head of the Climate Tech Fund. “We spend months researching each category, understanding customer pain points, and validating the opportunity before bringing in founding teams.”
Once a startup idea meets Diagram’s standards, it is formally incorporated, receiving both initial capital and early operational support akin to a pre-seed round. Diagram provides these startups with a foundation, including product wireframes, early customer relationships, and subsequent funding. After this foundational stage, these climate tech startups operate more independently, similar to a traditional portfolio company model.
This move into climate tech aligns with both Diagram’s values and investor demand. Diagram’s backers—who include notable entities such as Sagard, Investissement Québec, BDC Capital, and Teralys Capital—have shown a strong appetite for climate solutions despite broader economic pressures. According to PitchBook, climate-focused venture capital remained resilient even as overall fundraising slowed, with $18.7 billion raised in 2022. While 2023 saw a drop, the first half of 2024 has already secured $3.4 billion for climate VC funds, suggesting a rebound in the sector.
Paul Manias, partner and co-head of the Climate Tech Fund, believes that climate-focused software solutions are particularly well-suited to Diagram’s model. “We see software as highly adaptable and efficient, particularly in the climate tech space, where challenges like infrastructure management and energy optimization require scalable solutions,” said Manias. “While deep tech remains crucial, software offers rapid implementation to address urgent issues faced by companies on a daily basis.”
Under its climate initiative, Diagram is already working with two new companies. The first, Relion, was launched in 2023 and focuses on operational and maintenance solutions for electric vehicle (EV) charging infrastructure. Diagram led the company’s $3 million seed funding round. Another recent venture is Lyteflo, which is developing a sales enablement platform for EVs, with a particular emphasis on battery health and longevity.
Since its founding in 2016 as a venture arm of Sagard, Diagram has built a diverse portfolio spanning fintech, web3, and now climate tech. With over $400 million in assets under management and 25 companies launched, Diagram’s unique approach of in-house startup creation appears to be resonating across sectors.
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