A Vancouver-based venture capital firm says it is “doubling down” on investments in Canadian enterprises after closing a $110-million fund built to back clean technology.
In closing its third fund, Active Impact Investments has raised its total assets under management to $180 million, more than double its previous total. Founder and managing partner Mike Winterfield said the firm’s success has come at a tough time for green financing.
U.S. President Donald Trump’s administration has been openly hostile against environmental and climate policies. The president’s move to upend trade agreements through sweeping and inconsistent tariff policies has hobbled companies' capacity to plan and raise money.
Winterfield said his firm’s response has been to focus even more on backing Canadian companies.
“It is noisy and there are a lot of people that have been scared off,” he said. “We wanted to do Canadian deals. We’re Canadian-based. We’re patriotic.”
The green technology investor appears to be going against the current trend.
Jonathan Arnold, director of sustainable finance at the Canadian Climate Institute, said so far this year his group’s internal data suggest private equity and seed capital for climate technology have dipped.
Arnold said it’s not clear if the “Trump effect” is impacting climate investments more than other sectors of the economy, or if the decline is a result of anxious investors across the board.
“If you zoom out, private capital and equity are down overall,” he said.
Backing Canadian companies not a question of charity
In the past, Active Impact has backed a number of companies across North America — from Ontario-based end-to-end installers of electric vehicle charging infrastructure to a firm in Victoria that helps building owners retrofit and decarbonize buildings while saving money.
For any of the companies in the group’s portfolio, Winterfield said you could remove the world “climate” from their sales or funding pitch and still sell it to a customer. After all, he added, even customers who don’t think about the environment will benefit from saving 10 per cent on electricity or fuel, or 50 per cent on a new electric bicycle.
“We love companies that are already better, faster, cheaper,” said Winterfield. “And so the business or the consumer are making a choice based on progress, on innovation, and where the knock-on benefit happens to be climate.”
In its first $10-million fund, nearly two-thirds of the companies Active Impact invested in were Canadian-based. At the time, the investors tended to be local people, mostly high net-worth individuals, family offices, or foundations.
The second $70-million fund saw the investor base expand. But after backing 17 companies, only around half of them turned out to be Canadian, said Winterfield.
At $110 million, Active Impact’s latest and largest fund to date has attracted major corporate, institutional, and government investors. Some of the largest include Deloitte, the Cooperators, the Québécois workers’ pension fund Fondaction, the B.C. government’s InBC strategic investment fund, and the University of Victoria.
Winterfield and his colleagues have so far chosen to back seven companies with the latest tranche of money, including four based in Canada. Over the coming years, the VC will expand those investments to another 18 companies, raising the total to 25. Of those, 60 per cent will be Canadian, said the founder.
“Canada has already shown by the numbers that on a a per capita basis, we have had more clean tech wins than countries like the U.S.,” he said. “We punch above our weight class.”
In Vancouver fund, investors seek long-term green bets
The Active Impact team receives and screens hundreds of pitches a week. Only after backgrounding a company do they consider investing. The progress is tedious and typically leads the firm to invest in one or two companies a quarter, said Winterfield.
Once it's made a minority investment, Active Impact helps early stage companies with improving operations by identifying gaps in their leadership team, and introducing them to talented people to help them grow faster, get money, or scale up sales.
Investors who put money in the firm tend to be looking for long-term bets and get paid out as the overall performance of a fund improves or a company ends up getting sold off, said Winterfield.
After spending years in leadership roles at recruitment companies like Ranstad and digital services firms like Traction on Demand, the VC’s founder says he’s in it for more than the money.
“I left my career eight years ago and devoted the rest of my life to climate. That’s why I do what I do,” he said.
“I'm basically trying to find ways to help more climate companies succeed. And the way that you can do that is ensure they have oxygen, which is money.”
Large banks pull back climate promises but pension funds remain invested
Questions over big firms' commitments to financing climate change have grown over the last year.
Earlier this year, Canada’s big banks followed their U.S. peers and dropped out of the Net-Zero Banking Alliance — part of a wider retreat from climate commitments in North America’s banking sector following the election of Donald Trump.
More recently, Royal Bank of Canada, the country’s largest bank, dropped its sustainable finance commitments, prompting speculation others might follow.
But so far, no other Canadian banks have signalled they would follow in RBC’s footsteps. And pension funds — which ultimately own most of the financial risk and opportunity — have continued to invest in emerging green industries, said Arnold.
The sustainable finance expert said investors are sharpening their vision on what climate investments make sense.
“It’s changed the ceiling of ambition but I don’t think it’s changed the floor — and that floor is the day-to-day management of risk and opportunity,” said Arnold.
Canada's green competitive advantage
Canada maintains many advantages when it comes to an emerging clean technology sector, Arnold and Winterfield agreed.
While there are still gaps in taking ideas all the way to commercialization, both agreed that the country has a strong university system where original research thrives.
Government-led policies that reduce risk in green finance — like the industrial price on carbon — have made the country an attractive place to invest at a time the cost of many green technologies are coming down.
Consider Texas, a red state that is among the top adopters of new renewable energy in the U.S., according to the country's .
“Why? Is it because they love renewable energy and they want to be known as a green state? Absolutely not. It's because it's cheaper,” Winterfield said.
Some investors might be scared of investing in climate with Trump in the White House. But Winterfield says there’s no reason to be if you focus on economics and support companies that are not reliant on grants, subsidies and regulation.
Backing profitable companies that inevitably help cushion the impacts of climate change is an idea that has guided Active Impact since its inception and helped see it through turbulent times, said Winterfield.
“We believe very strongly in that thesis, because that is what has saved us from all of the political headwinds and tailwinds,” he said. “Those are going to be constantly changing.”
Will clean tech be the next 'engine of growth'?
Outside of the U.S., many of Canada’s trading partners are forging ahead with climate policies that would restrict laggards from trade opportunities.
The European Union and United Kingdom, for example, are both preparing to introduce carbon border adjustments over the next two years. The policies essentially place a tariff on goods based on the greenhouse gas emissions produced during their manufacturing.
Arnold said he’s confident there will come a moment soon when the physical and economic realities of climate change will make investing in green technologies “an engine of growth.”
At the moment, however, he said governments are starting to realize, that at a time of economic uncertainty, climate policies need to both make money and create a more livable world.
“It does need to be profitable,” Arnold said. “I think that’s just the reality.”
