Vancouver-based venture capital firm Yaletown Partners has raised $100 million CAD in the first close of its third Innovation Growth Fund (IGF III), continuing its focus on investing in digital infrastructure technology companies.
“We brought IGF III together in record time amidst one of the more complex funding environments in the last decade,” said Salil Munjal of Yaletown Partners.
Being Yaletown’s eighth fund, IGF III aims for a final close of $250 million, exceeding the 2023 final close of its predecessor. According to Yaletown partner Michael Sfalcin, investors in IGF III include BMO Capital Partners, provincial Crown corporation InBC, federal Crown corporations Export Development Canada and Farm Credit Canada Capital, an undisclosed Canadian pension fund, and undisclosed Canadian family offices. Existing limited partners (LPs) and potential new LPs are undergoing diligence for the second close. InBC investment principal Heather Tanaka noted that IGF III represents her firm’s first subsequent commitment to a venture fund after investing in IGF II in 2022.
Munjal highlighted the complex funding environment, hampered by a cool exit market affecting general partners’ ability to exit investments and return cash to LPs. Data from 2024 and 2025 shows a five-year low for venture deals, a shrinking early-stage pipeline, and a difficult fundraising market for Canadian venture capital funds.
IGF III’s first close was raised in approximately six months, with a final close aimed within the next year. This swift raise is attributed to IGF II’s performance, which is consistently generating distributions back to LPs.
IGF III will primarily invest in Series A and B stage companies in North America, with a preference for Canadian companies. Investment criteria such as cheque size and timeline depend on market conditions. Yaletown’s “intelligent industry thesis” focuses on digital infrastructure technologies, including advanced analytics, edge computing, networking, and physical AI. The fund aims to support companies enhancing productivity, resiliency, and sustainability in industries like energy, manufacturing, logistics, agriculture, and transportation. While no capital has been deployed yet, several opportunities are in diligence.
Founded in 2001, Yaletown invests in growth-stage North American technology startups to improve traditional companies’ efficiency, aiming for strong financial returns and “climate-resilient growth.” With its headquarters in Vancouver and offices in Calgary, Edmonton, Toronto, Montréal, and San Francisco, Yaletown’s total active funds under management have reached approximately $600 million. Its portfolio companies include Elevated Signals, Innerspace, and Inverted AI.
Correction: A previous version of this story incorrectly stated that the Canadian Pension Plan was a limited partner in IGF III, while it is an undisclosed Canadian pension fund.
Feature image courtesy Yaletown Partners.