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India’s climate tech ecosystem in dire need of both early, growth-stage funding: Report

By A Representative

India’s climate tech ecosystem, which boasts over 800 startups, is in dire need of both early and growth-stage funding to leverage its full potential, according to a report by Indian Institute of Management-Ahmedabad (Ventures) and MUFG Bank, Japan. Despite a robust initial funding landscape, with approximately two-thirds of climate tech startups receiving seed capital, growth-stage investments remain critically lacking. 
The report highlights that a mere 2.5% of these startups have successfully raised Series A+ funding, primarily within the electric mobility sector. While more than 80% of these startups focus on emission reduction solutions, offerings aimed at enhancing resilience to climate change are considerably limited. It emphasizes that the challenge of securing growth-stage capital is a significant barrier for these companies as they strive to scale their innovations and maximize their impact. 
The report outlines sector concentration within the climate tech space: transport and mobility segments dominate, with over 350 startups capturing nearly 85% of total climate tech funding. In contrast, other critical areas like Industrial Decarbonization, Waste Management, and Alternative Fuels remain underfunded despite their substantial potential in combating climate change. 

Future prospects

The analysis identifies promising areas for innovation and growth, including decarbonization technologies, waste-to-value initiatives, and alternative fuels like biofuels and hydrogen. Published on September 20, 2024, the report titled “Innovation for Impact: Indian Startups Driving Climate Action” was launched at the Climate Action Summit—Building in India, for the World. It offers a comprehensive look at India's rapidly evolving climate tech sector and the essential role that startups play in tackling climate issues. 

A call for support

As the seventh most vulnerable nation to climate change, India stands at a crossroads of challenges and opportunities within its climate tech landscape. The report underlines the urgent need for not only enhanced financial backing but also supportive policies that can enable startups to thrive. 
Chintan Antani of IIMA Ventures stated, “The $3.6 billion raised by startups over the past decade underscores the substantial potential of this sector and the crucial need for increased support to help scale innovative solutions. Since 2012, IIMA Ventures has championed climate action, assisting over 100 startups and bridging knowledge gaps to foster collective efforts.” 
The report also highlights five transformative areas projected to reshape India's climate tech innovation: carbon capture technologies, waste-to-value solutions, growing alternative fuels, and the urgent necessity for innovative financial strategies to address a projected $1 trillion climate finance gap over the next decade.

Engagement at the summit

The Climate Action Summit drew a diverse group of stakeholders, including investors, entrepreneurs, corporate leaders, and sustainability experts. Prominent figures from sustainability sectors engaged in discussions about collaborative opportunities to advance climate tech solutions. 
Takuya Senoo from MUFG emphasized the importance of climate finance for achieving India’s net-zero goals: “It is imperative that we help climate tech startups scale up. By investing strategically, we can foster sustainable growth and resilience for all.” 
The Climate Action Summit has served as a pivotal platform for advancing growth and innovation within India’s climate tech ecosystem. Both IIMA Ventures and MUFG are committed to fostering this growth through the India Climate Tech Initiative, a program designed to support startups in navigating climate-related challenges. 

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