The last quarter of FY2024 sees climate focused solutions, bagging investments worth $232.75 million, continuing the momentum from previous months.
The ‘Sustainable Mobility’ ecosystem continues to bag deals right from funding towards micro-mobility solutions (Yulu Bikes with $19.2 million) to electric scooters (River with $40 million).
In an interesting update, signifying the growing scale of electric vehicles, Mahanagar Gas which is a government owned natural gas company, acquired a stake in 3ev a three-wheeler vehicle manufacturer. This foray demonstrates the growth potential and scope of applications for electric vehicles as the investment looks to drive 3ev’s innovative Battery-as-a-Service (BaaS) model.1
Supporting the EV growth has been battery recycling solutions. Lohum Cleantech, which provides an end-to-end ecosystem of battery recycling, repurposing and battery life cycle management service, has raised $76 million between February and March, as part of its on-going Series B round.
The quarter has also seen innovations aimed to address the climate change exacerbated water crisis, raise funding. INDRA, an early-stage provider of smart water treatment systems, secured $4 million in a Series A round. Rite Water Solutions, which through its products and services enables access to safe and clean drinking water, raised $3.9 million. These two deals cumulatively account for the highest investment that this segment has witnessed in the financial year.
The interest towards sustainable products continues to grow, as more innovations bag deals, on the heels of an evolving consumer interest towards eco-friendly products2. The funding is driven mainly by Seed and Series A stage enterprises - Plant based home care startup - Happi Planet raised $1 million while Koparo, a Direct-to-Consumer brand, which falls in the similar category also bagged $0.71 million. Kidbea - a bamboo plant based kidswear brand raised $1 million. While the quantum of the deals is relatively low compared to early-stage players in the sustainable mobility segment, there is a growth in the deals recorded in the organic and sustainable consumables category, when compared to previous years.
Climate-Smart Agriculture (CSA) has seen a relatively slower muted investment flow, both in early as well as later stages. In the latest quarter, one segment of CSA - organic farming has seen traction this quarter with Akshayakalpa raising funding. It stood out as the sole later-stage enterprise to secure funding, raising $12.03 million. With its business model, Akshayakalpa specialises in supplying organic milk and assisting farmers in transitioning to sustainable, regenerative farming practices The clean energy segment also saw low deal flow.
Continuing with the trend of technological innovations aiming to measure and manage carbon emissions; Varaha with its unique carbon offset nature-based solutions has raised $8.7 million in a Series A funding. The carbon credits from their nature-based solutions, such as regenerative agriculture, ARR (Afforestation, reforestation, revegetation), and biochar projects promote climate adaptation and increased income for smallholder landowners. You can also find more information about Varaha and its business model in this edition's Innovation Spotlight section.
Stage Wise Snapshot
*Amounts mentioned in USD Mn
When compared on an annual basis, equity investments in climate-tech stood at $836 million for FY 2023-2024 as compared to $1 billion in the previous financial year. While this has been a decline of 23% on an annual basis, the Jan-March quarter of FY24, stands higher than the comparative quarter of the previous financial year.
Sector Wise Analysis
*Amounts mentioned in USD Mn
Note: From the purpose of classification of deal data, IIC bifurcates the climate-tech sector into the following sub-sectors:
Each of the above sub-sectors are further categorised into sub-segments, based on their specific product offering. For instance, one of the segments under Climate-smart agriculture is that of ‘Organic Farming’.
We take cognisance of the fact that emerging innovations are increasingly adopting a climate lens to their products and/or services. Hence while the original business case of the solution may align with a specific sector (For example: agriculture or mobility), we categorise them into the respective sub-segment based on the climate impact that their solution presents.
As a case in point, Akshayakalpa (mentioned above) which is primarily an organic dairy brand, is also enabling farmers transition to sustainable, regenerative farming practices, thus contributing to a reduction in carbon emissions. Hence, we have categorised them under ‘Organic Farming’.
To read more on IIC’s assessment of the Climate-Tech space in India, please download the report ‘Climate Tech Investment Trends In India : A 2022 Retrospective’.
