Climate tech startups in India struggle to secure growth-stage funding: reports

New Delhi, September 21 (KNN) A new report highlights both the potential and challenges facing India’s climate technology sector, revealing that less than 3 percent of startups working in this critical space have raised Series B funding or later.

This finding was confirmed despite India being the seventh most climate-sensitive country in the world.

The report, ‘Innovating for Impact: Indian Startups Driving Climate Action’, jointly produced by IIM A Ventures and MUFG Bank of Japan, offers a comprehensive analysis of the Indian climate technology ecosystem.

This sector, which includes over 800 active startups, raised over US$3.6 billion between 2014 and 2024.

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

Chintan Antani of IIMA Ventures highlighted the importance of the sector, stating, “The Indian climate technology sector is not only a fast-growing industry but also a key force in the global fight against climate change.”

The report reveals that more than 80% of climate tech startups focus on emissions-reducing (mitigation) solutions, with resilience-building efforts relatively underrepresented.

Transportation and mobility startups dominate this ecosystem, raising almost 85 percent of total funding across more than 350 companies.

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

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

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

Alternative fuels are another high growth area, including electric vehicles, green hydrogen and biofuels.

The report indicates that USD 1 trillion will be needed for climate finance over the next decade, which creates opportunities to use innovative financial instruments.

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

The report highlights the critical role of the Indian climate technology sector in addressing global environmental challenges and 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 could prove crucial in mitigating environmental threats and supporting sustainable development.

(KNN Office)