Climate Tech Outlook 2023

ClimateAngels | Feb 21, 2022

save-planet-concept-with-people-analysing-earth-climate-tech

Climate change is undoubtedly the greatest challenge facing humanity today. This is where India’s climate tech startup ecosystem comes into play.

Utilizing technology that has already changed the way we live, it’s easier for individuals and businesses to take the right steps ahead.

However, solutions to this global challenge are specific to each region and must be grounded in reality. This is why there has been a growing interest in Indian climate tech startups by early-stage investors, but progress has been slow beyond that stage.

Climate tech has yet to receive the same investment maturity or depth as other prominent sectors, as investors remain skeptical about how these startups’ business models will perform in the long term.

The good news is that this may soon change. In 2023, it’s expected that climate tech will start to penetrate across industries and sectors, with some founders claiming that niche models will start to see traction.

So far, India’s climate tech landscape is dominated by electric vehicle companies, but it’s also time for investors and the government to pay attention to other areas.

India’s COP27 goals are ambitious and require significant work across multiple industries. Investing in early-stage climate tech startups can address critical pain points, but it’s also crucial to accelerate their growth.

Investors and founders are stuck in a cycle of wants and needs, with investors waiting for startups to crack the model and founders needing investors to take bigger risks.

What are the latest statistics for Climate Tech in India?

India, with its high ranking in the global climate risk index and a population of over 1.43 billion people, is particularly vulnerable to the impacts of climate change.

The private sector and climate tech startups will play a crucial role in achieving the country’s net-zero carbon emissions target of 2070. A report by Unitus and Climake India suggests that the Indian climate tech market needs an investment of over $1 Trillion by 2030 to meet sustainability goals.

2021 was a significant year for climate tech investments, with more funding in that year than in the previous three combined. Although $2 Billion has been invested in the sector in the past eight years (2014-2022), the climate tech startup ecosystem is still relatively new compared to other prominent sectors.

Moreover, the climate tech landscape is vast and encompasses a variety of businesses, including electric vehicles (EVs), AgriTech startups, solar and clean energy companies, alternative fuels and materials startups, biotech and agrifood life sciences companies, sustainable consumer brands, and more.

In 2023, it’s time to look beyond EVs, which are currently the focal point of the sector.

How is India’s ecosystem for Climate Tech?

Climate tech covers a wide range of areas, including sustainable agriculture, recycling and waste management, alternate meats, carbon management, and more.

Here are the main components of India’s growing Climate Tech ecosystem:

1. Startup Growth: India’s climate tech startups are thriving, addressing diverse environmental challenges.

2. Government Initiatives: India’s government promotes sustainability through initiatives like the National Solar Mission.

3. Investor Interest: Climate-focused startups in India attract substantial domestic and international investment.

4. Technology Adoption: Growing awareness drives the adoption of clean energy and sustainable practices.

5. Collaborative Ecosystem: Partnerships foster innovation and sustainable technology development.

6. Challenges: Regulatory hurdles and funding gaps pose challenges to the ecosystem’s growth.

7. Global Impact: India’s innovations contribute to both local and global climate solutions.

How to lead through uncertainty?

The times have changed. It’s up to venture capital firms (VCs) to take climate tech seriously and support India’s ambitious COP27 goals with investments and policy changes that boost startups and innovation.

Climate tech can be any technology that helps mitigate the impact of global warming, reduces greenhouse gas emissions, or advances sustainable practices. With so much at stake, it’s crucial that we move beyond the curve and invest in this vital sector.

There’s really no bigger challenge facing humanity than climate change. But even in 2023, a lot of the public discourse revolves around personal responsibility rather than collective action to tackle climate change.

Perhaps the answer lies in leveraging technology which has already changed the human way of life in most ways, and making it equally easy for individuals and businesses to take the right steps. And that’s the intersection that India’s climate tech startup ecosystem is playing in.

While this is definitely a global challenge, the solutions are very region-specific and need to be tethered to the ground reality. It’s also why there’s a lot more early-stage investor interest in the Indian climate tech startups over the past couple of years, but things have been slow beyond the early stage.

Even as startups push toward innovation in this vital area, climate tech has not seen the same investment maturity or depth as other prominent areas. Investors are still circumspect about how some climate tech business models will pan out in the long term, regardless of the obvious value these startups will unlock in the future.

However, the gist is that the tide is about to change. In 2023, we will start seeing climate tech permeating across verticals and sectors some founders claim. And the sector’s niche models will start seeing initial traction.

Hence, it’s time that investors and the governments pay attention to it.

More Climate Tech Insights for You

References

1.https://www3.weforum.org/docs/WEF_Mission_2070_A_Green_New_Deal_for_a_Net_Zero_India_2021.pdf

2. https://s3.ap-south-1.amazonaws.com/cdn.climake.co/reports/2022/The+State+of+Climate+Finance+in+India+2022.pdf

3. https://worldpopulationreview.com/countries/india-population

4. https://pib.gov.in/PressReleasePage.aspx?PRID=1876119

5. https://www.iea.org/policies/4916-jawaharlal-nehru-national-solar-mission-phase-i-ii-and-iii