This has been a fortnight of billions and trillions of dollars. In the 18 months leading up to August, global early-stage funding in climate and clean tech startups amounted to a record US$40 billion record US$40 billion Bloomberg An Investor's Guide to Winners and Losers of COP26 Climate Talks Read more —a reflection of the swollen liquidity in the financial system. Of this deluge, however, just a trickle—around US$445 million—flowed into India until 11 November.
Last week, ~450 firms representing US$130 trillion worth of assets under the aegis of Glasgow Financial Alliance for Net Zero ( GFANZ GFANZ GFANZ is a global coalition of leading financial institutions committed to accelerating the decarbonisation of the economy. ), committed to shifting funds into green projects. Since rich nations are not meeting meeting Nature The broken $100-billion promise of climate finance — and how to fix it Read more their promise on climate finance, much rests on the ardour and appetite of private investors, who, needless to say, are looking to back projects that promise good returns.
In India, therefore, it’s mobility firms that are drawing VCs in (graphics below), while private equity (PE) firms and financial institutions are putting their considerable resources behind renewable energy. Since 2020, nearly US$294 million has been pumped into mobility companies—those dealing in electric vehicles, batteries, and charging—which are evidently the flavour of the year. Globally, VC-backed mobility deals amounted to as much as US$75 billion US$75 billion Pitchbook Rivian, mobility and the race for a net-zero future Read more this year. Many of these also saw participation from the venture arms of corporates, with a good number of these from the automotive sector. (Hyundai leads the pack with 37 mobility deals.)
The Indian market is still nascent. “I haven’t found Limited Partners (LPs) in India who have an appetite for climate tech. The return on investment [here] is lower when compared to other sectors,” says Harsha Moily. A former entrepreneur and management expert, Moily is in the middle of raising a US$200 million climate tech fund, and hopes to make its first close by January end. All the money in this sector is going to Europe, Israel, and the United States; not to India, he says.
“The so-called climate tech investments in India are in solar, wind, and EVs but we believe none of these move the needle in climate tech because their supply chain has a lot of fossil fuel built into it,” says Moily.