DCVC’s target for its first climate-focused fund, DCVC Climate Select, has been all over the place and highlights the roller-coaster venture fundraising conditions of the last few years and how LPs aren’t as quick to back new strategies from established managers.

The Silicon Valley VC firm launched the fund in December 2022 with a $500 million target, according to an SEC filing. A year later, it lowered its target to $300 million after its year of fundraising brought in only $157 million of commitments by then, according to a December 2023 SEC filing. Now, a source familiar with the matter tells TechCrunch that things have started to fall into place and $400 million may be a more accurate reflection of where the fund is headed.

A recent New Mexico Inno article about New Mexico SIC’s $50 million commitment to the fund that also mentions the $400 million target is “consistent with our expectations around the fund,” DCVC spokesperson Nate Nickerson told TechCrunch over email.

DCVC is a deep tech firm co-founded by Matt Ocko, known for decades of investments (like MosaicML, bought by Databricks) and Zachary Bogue, known for Square, AngelList, Uber and for his annual ​“Deep Tech in Davos” event. As part of the Davos event in February, Bogue called out AI applications for climate technologies as one of the “major opportunities” for DCVC, alongside tech bio and robotics.

This climate fund is targeting climate startups at the mid-stages where the firm thinks the climate startup ecosystem is currently underfunded, according to materials from a recent New Mexico State Investment Council meeting where the GP presented. Although this is DCVC’s first climate tech dedicated fund, the firm has invested $360 million from other funds into such startups over the last decade, also according to New Mexico SIC’s March 26 meeting.

While Nickerson said the initial $500 million figure was just a pro forma amount before the fund could take on money from LPs, the industry standard is that this number does represent a fund’s target. Internally, people at the firm know that the firm had to adjust its expectations to more “sober” market conditions, the source familiar with the matter said.

This person added that DCVC’s existing portfolio climate companies started seeing some wins entering 2024 that could be helping the fundraising journey. One example is Twelve, which creates products traditionally made using fossil fuels from carbon. It recently signed a 14-year purchase agreement with the International Airlines Group — which includes airlines like Aer Lingus and British Airways — to buy 260 million gallons of Twelve’s more sustainable aviation fuel.

“These are not small deals, small numbers, small evidence. This is the kind of financial performance for skeptical customers,” the source said. “A huge secular change is possible in these massive [industries]. These disruptor companies are putting numbers on the board consistent of what you would expect with public companies one day. That’s a very persuasive fact pattern.”

DCVC isn’t the only fund to lower a target or hold a final close on less capital than it expected after a tougher 2022 and 2023 fundraising cycle. Tiger Global’s latest fund raised $2.2 billion of its $6 billion target. In the first half of 2023, firms such as Founders Fund, Insight Partners and TCV all slashed their fund targets.

Fundraising got incredibly tough for venture firms across the board in 2022 and 2023. While 2022 set a new fundraising record for U.S.-based firms — $172 billion, according to PitchBook — analysts said that largely was due to funds raised in 2021 closing in 2022. The real effects were felt in 2023. U.S. firms raised $66.9 billion in 2023, according to PitchBook, the lowest total since 2017 and a 61% decrease from the record-setting year prior.

On the other hand, climate investing is one of the few hot spots, outside of AI, that’s attracting increasing VC attention and doing well for VC fundraising as well. Climate-focused VC funds have raised more than $710 million so far in 2024, according to data from Preqin, on track to match or surpass last year’s $2.17 billion raised and not far off 2022’s record of $2.9 billion.

While both LPs and analysts have told TechCrunch that they aren’t expecting 2024 to be a significantly better year for VC fundraising — some think it might be worse than 2023 — for DCVC’s new climate fund, things may actually be headed in a better direction than its recent SEC disclosures have indicated.