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What’s stopping VCs from funding clean-tech startups in India?

by Manali purohit, Sep 23
2 minutes read

Indian business media, especially those that cover the startup space, have made a huge deal about an ongoing “funding winter” one that, apparently, will last at least until early 2023. Gone are the days of huge cheques and growth at any cost; profitability is now on top of the agenda. However, one sector which isn’t facing that particular problem is cleantech. Early-stage climate tech is already among the most-funded segments in India right now. Venture capital (VC) funds, private equity (PE) firms, even governments—everyone’s looking to bankroll the next big sustainable initiative.

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So what?

However, early-stage cleantech has an interesting problem.There’s a lot of money waiting to be invested but founders need to get fundable ideas that plan to generate revenue. And lack of working models isn’t the only issue here. It turns out due diligence is a real pain too. Typically, VCs rely on sectoral experts to validate the technological aspects of any cleantech idea. But oftentimes, there’s simply too little, or even no, data to complete this exercise. All these things mean that to be fundable, a cleantech start-up in India most likely needs to be working on a model that has shown moderate success elsewhere, especially in regions like Southeast Asia or East Asia.



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