Once considered a niche or “impact-only” space, sustainability has now become central to startup investments in India. On this Earth Day, we delve deep into the green investment wave sweeping across the Indian startup ecosystem—and why venture capitalists are finally putting their money where their values are.
The Rise of Green Capital in India
According to a report by IVCA-EY (Indian Private Equity & Venture Capital Association and Ernst & Young), investments in Indian cleantech and sustainability startups surged over $2.6 billion in 2024 alone—a 43% increase from 2023. Categories like electric mobility, circular economy, sustainable agriculture, and clean energy are attracting more VC interest than ever.
“Sustainability is no longer just about doing good. It’s about building scalable, future-proof businesses,” says Anjali Bansal, Founding Partner at Avaana Capital, one of India’s leading climate-focused VC funds.
Why VCs are shifting to Green Startups?
🔹 Climate Risk = Financial Risk
Investors are increasingly seeing climate resilience as a financial safeguard. With rising regulatory pressure, global climate pledges, and consumer demand for green solutions, VCs are aligning portfolios with ESG (Environmental, Social, and Governance) principles.
🔹 Policy Push
India’s ambitious Net Zero by 2070 target and policies like PLI schemes for EVs, solar, and green hydrogen have made the sector more investible.
🔹 Global LP Mandates
Many global Limited Partners (LPs) are now demanding climate-aligned portfolios, driving funds to back green startups.
Startups That Are Turning Heads
Several Indian startups are emerging as champions of sustainable innovation:
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Ecozen: Specialises in solar-powered cold chains and pumps for agriculture. It raised $25 million in Series C funding in 2023, led by Nuveen and Dare Ventures.
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Recykal: A digital waste commerce platform connecting recyclers, brands, and government bodies. The startup closed a $22 million round from Morgan Stanley India Infrastructure.
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Battery Smart: Offering battery swapping for EVs, it secured $45 million in 2024 from Acumen, Blume Ventures, and Tiger Global.
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Carbon Clean: Providing carbon capture solutions to industries, this IIT-incubated startup has received global backing, including from Chevron and WAVE Equity Partners.
Sector-Wise VC Trends (2024)
(Source: Tracxn, IVCA-EY Report 2024)
VCs With a Green Thesis
Several venture firms are actively building green investment theses:
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Avaana Capital – Focused on climate-tech and sustainability.
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Inflection Point Ventures (IPV) – Recently backed sustainable fashion and EV startups.
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Transition VC – India’s first climate-tech-only VC fund.
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Peak XV Partners (formerly Sequoia India) – Invested in Zypp Electric and other green ventures.
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Lightrock India – Has a dedicated focus on climate and clean energy startups.
“Startups solving for environmental challenges are the unicorns of tomorrow. They won’t just scale—they’ll shape policy, industry, and culture,” says Pranav Pai, Founding Partner at 3one4 Capital.
Challenges on the Road to Scale
Despite the momentum, green startups face hurdles:
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High CapEx requirements
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Lengthy gestation periods
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Policy uncertainty at state levels
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Lack of awareness and adoption in Tier 2 and 3 cities
However, with increasing climate consciousness, global partnerships, and robust startup incubators like AIC, NSRCEL, and C-CAMP, the Indian ecosystem is slowly bridging these gaps.
Sustainable is Scalable
As India’s climate crisis deepens and international pressure mounts, startups are no longer on the sidelines of environmental action—they are at the forefront. From carbon capture to compostable packaging, Indian founders are proving that building for the planet and building a profitable business can go hand in hand.
This Earth Day, it’s clear: green is not just good—it’s gold.
