Q3 22 round-up: Funding update for Indian climate Startups
Climate startups raised approximately 1300 million USD in the first nine months of the year 2022, nearly 2X of 800 mn USD raised in the entire year of 2021. These startups received over 450 million USD in funding in Q3 22 alone. Deal size increased, as many startups raised their series B and C rounds, 12 of the 32 transactions were worth more than $10 million.
While investment in climate startups is rising, it is still insignificant, in comparison to venture capital funding in Indian tech startups (less than 5% of VC funding in startups) and woefully inadequate to meet India’s growing climate challenges. Now that we’ve established the context, let’s get into the specifics of Q3 funding (July-September22).
While e-mobility always receives the most funding (see funding break up below), it is important to consider other segments that are also attracting capital. This quarter’s companies included Clime, a carbon offset platform, Akshayakalpa, an organic dairy farm, String Bio, a biotechnology company, and Uravu labs, a water tech start-up.
The climate investor club is growing, and corporations are playing an important role. Several transactions this quarter highlighted the growing need for large corporations to invest in climate technologies. Reliance Energy and MM Forgings each purchased a majority stake in Sense Hawk and Rizel Auto. Magna, a Canadian automaker, invested in Yulu, a last-mile mobility platform. In addition, many corporate VC funds including BASF venture capital and Schneider Electric Energy Access Asia (SEEAA) invested in climate startups.
- Electric mobility accounted for 70% of total funding at $ 310 million, with Greaves electric raising $ 150 million and Yulu raising $ 80 million. In addition, Ultraviolette, a bike manufacturer, and Cygni, a battery manufacturer, River, an electric two-wheeler manufacturer all raised capital. MM forgings, which manufactures iron forgings for commercial cars and passenger vehicles acquired a majority stake in Rizel auto, a manufacturer of electric motors and powertrains.
- Battery technology has started catching with up with 10 minutes delivery. Exponent energy, that promises 15-minute charging, raised its series A and also announced a partnership with Alti green, an electric commercial vehicle manufacturer.
- Biotech was the flavor of the quarter, reflecting the growing importance of nature-based solutions in combating climate change. String Bio, which promises to convert methane to protien, and Sea6 Energy, an ocean farming company, both raised series B rounds of funding, while Loopworm, an insect biotech startup raised seed funding.
- Another notable sector was renewable energy, which saw two noteworthy transactions: first, SenseHawk, a digital solar platform, sold a majority stake to Reliance Energy, second was Aerem, a solar financing platform, that raised its seed round of funding.
- The Sustainable food segment also saw investment, with Akshayakalpa an organic dairy farm raising its series B round. Additionally, two Plant protein companies; Shaka harry, and Alt food also raised capital.
- Other interesting startups that raised capital were New Leaf Dynamic Technologies (biomass based cold storage), Beco (Market place for sustainable products), water tech startup Uravu labs, and Carbon Masters (food waste to fuel).
- Investor pool included early-stage VC funds, thematic funds, international climate-based funds and corporates. More info in the table below.
You can download the list of investors who invested in Indian climate startups in Q3 22 here.