When the world is heading towards inevitable climate change and India is seventh most vulnerable country that demands innovative solutions, Indian climate-based startups are witnessing a decline in growth-stage funding.
India's climate tech sector, comprising of over 800 active startups, plays a crucial role in the global fight against climate change. However, they may not achieve their full potential without adequate support and later-stage funding. While early-stage funding is relatively healthy, with two-thirds of funded startups securing seed rounds, there remains a significant shortfall in growth-stage capital, as per “Innovation for Impact: Indian startups driving climate action report.
Less than 3 per cent of startups have successfully raised Series B funding or beyond, indicating a critical need for larger, later-stage investments to scale breakthrough solutions. The report highlights the critical need for stronger financing and policy support to help startups scale.
“India's climate tech sector is not just a rapidly growing industry but a vital force in the global fight against climate change. The USD 3.6 billion raised by startups over the past decade highlights the sector's significant potential and the pressing need for enhanced support to scale breakthrough solutions. IIMA Ventures has been pushing the needle on climate action from as far back as 2012. We have supported more than 100+ climate tech startups and each of them are taking on some of the hardest challenges, while our research is bridging the knowledge gaps to impel collective action”, Chintan Antani, IIMA Ventures.
The report also identifies five breakthrough areas poised to reshape climate tech innovation in India. decarbonisation is projected to become a USD 10.3 billion market by 2032 with a focus on carbon capture and storage technologies; circularity and waste-to-value, supported by the USD 15 billion waste management industry, offering new opportunities in recycling and sustainable materials; the rapidly growing alternative fuels sector, including electric vehicles, biofuels and hydrogen; and the need for innovative financial solutions to close the USD 1 trillion climate finance gap over the next decade. additionally, there is increasing demand for artificial intelligence (AI) and internet of things tools for climate tracking and reporting.
Takuya Senoo, Regional Executive of MUFG India, reiterated the global financial group’s commitment to climate action, most notably demonstrated in its intent of deploying JPY100 trillion of sustainability-related financing by 2030: “As the climate crisis accelerates, investing in innovative solutions is more crucial than ever. At MUFG, we recognize the transformative potential of India's climate tech startups and are committed to helping them thrive through strategic investments and partnerships. Together, we can drive sustainable growth and create a resilient future for all.” he added.
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