Climate Tech Start-Ups In India Struggle To Secure Growth-Stage Funding: Reports

New Delhi, Sep 21 (KNN) A new report highlights both the promise and challenges facing India's climate technology sector, revealing that less than 3 per cent of startups in this crucial field have secured Series B or later funding rounds.

This finding comes despite India's position as the 7th most vulnerable country to climate change impacts globally.

The ‘Innovation for Impact: Indian Start-ups Driving Climate Action’ report, jointly produced by IIM A Ventures and MUFG Bank of Japan, offers a comprehensive analysis of India's climate tech ecosystem.

The sector, comprising over 800 operational start-ups, has raised more than USD 3.6 billion between 2014 and 2024.

While early-stage funding appears robust, with two-thirds of funded start-ups securing seed rounds, the report identifies a significant gap in growth-stage capital. This disparity suggests a pressing need for increased later-stage investments to scale promising solutions.

Chintan Antani of IIMA Ventures emphasised the sector's importance, stating, "India's climate tech sector is not just a rapidly growing industry but a vital force in the global fight against climate change."

The report reveals that over 80 per cent of climate tech start-ups focus on emission-reducing (mitigation) solutions, with resilience-building efforts comparatively underrepresented.

Transport and mobility start-ups dominate the ecosystem, raising nearly 85 per cent of total funding across more than 350 companies.

However, sectors such as industrial decarbonisation, waste management, circularity, and alternative fuels remain underfunded despite their high potential for climate impact.

The study also identified several key areas for climate tech innovation in India.

The decarbonisation market is projected to reach USD 10.3 billion by 2032, with opportunities in carbon capture, utilisation, and storage technologies. The waste management industry, valued at USD 15 billion, presents significant potential for circular economy solutions.

Alternative fuels represent another high-growth area, encompassing electric vehicles, green hydrogen, and biofuels.

The report notes an estimated USD 1 trillion climate finance need over the next decade, presenting opportunities for innovative financial instruments.

Additionally, there is growing demand from government and corporate sectors for data-driven climate action tools, including air quality monitoring, disaster management, and biosphere tracking solutions.

The report underscores the critical role of India's climate tech sector in addressing global environmental challenges while highlighting the need for increased investment and support to scale breakthrough solutions.

As India continues to grapple with the impacts of climate change, the growth and success of these innovative start-ups may prove crucial in mitigating environmental risks and fostering sustainable development.

(KNN Bureau)