At least in my memory, there has been no year like 2022. It began under the shadow of Covid-19 and we moved on like it never happened. By almost every metric, the Indian economy and travel is back to 2019 levels. Part of the reason why the reverse change happened so swiftly is that people were tired of living behind computer screens and were eager to explore the world without any restrictions. A similar change in consumer behavior is brewing in the impatience of several businesses and some consumers being eager to shed the unsustainable ways of being for the planet.
If the chatter in the startup and VC circles of India is any indicator, the year 2022 was a landmark. It is becoming obvious that building a startup in the broad climate space is no longer an exercise in making an impact alone. Today, companies like Battery Smart have shown that being climate-focused can scale up very quickly too, without any significant policy intervention. As a consequence, a key trend has begun in 2022 that single bottomline VCs like Blume have begun to go deeper into the Climate space. We announced 6 of our Climate investments - ElectricPe, Battery Smart, Aerem, Relove, Accacia and Vecmocon - in the last 13 months. The rest of the industry has also felt similarly bullish and several hundred millions have rolled into the sector.
As VCs we have a need to be astute about picking sectors. While all our companies make a deep impact on the lives of people, this can’t be delivered as a return to our investors. Hence, the narrow window of opportunity that comes about is only in sectors that are about to take off. Electric Vehicles ecosystem has been in that narrow window for us over the last 24 months. As the ecosystem matures, various sectors within EV space will also attract more VC love in the next 36 months.
But the broad ClimateTech space is going to be much bigger than EVs alone. This will bring about a change that will impact every single business and consumer across the globe. But not everything will be VC fundable in the next 12 months. We expect sub-segments like accounting software and marketplaces to get off the ground earliest. These are easier to understand, the need in the enterprise segment is urgent and they look similar to what VCs are most comfortable underwriting. Some early stage money is likely to flow into (deep) technology startups solving for Green Hydrogen, battery recycling and various other forms of mobility like eVTOL. Infrastructure scale services like Carbon Sequestration (our company Carbon Clean here) will acquire much higher scale as a quick fix to polluting industries. Those businesses which are helping other businesses and consumers make more sustainable changes in their behavior and processes would begin to find traction in 2023 and at least some of them will raise early VC money too.
Mr. Arpit Agarwal is a Director in Blume Ventures' investment team. Before joining Blume, Arpit started Academic Ventures, a consulting firm for commercializing technology, sold High-Performance Computing at Tata CRL in Pune and wrote video codecs at Ittiam Systems in Bengaluru. He has also co-founded Headstart Network, India's largest startup community which touches more than 100,000 entrepreneurs annually. He also co-created India DeepTech, an industry alliance for promoting deep tech startups. He was named in the prestigious 40-under-40 lists by Equalifi (erstwhile AIWMI) in 2020.
He is an alumnus of IIT Bombay and NIT Trichy.
Background of Blume Ventures
Blume Ventures has invested in and helped build over 100 startups, looking to solve uniquely Indian problems, across geographies and verticals.
Beyond the capital that they provide, Blume Ventures also has on-demand counsel and support, via access to its services partners Constellation Blu (financial and legal advisory-cum-compliance), MetaMorph (recruitment), as well as its in house resources providing access to growth capital, sales and strategic partnerships and community.
