Climate’s angels are here; we need many more
ClimateAngels | Sept 09, 2022
August was a cruel month
• In China, 900 million people were affected by the severest heatwave and drought in decades. The national economy suffered a massive jolt.
• The death toll from heatwaves that engulfed Europe crossed 12,000.
• A third of Pakistan was under water, with an estimated economic loss of USD10 billion. Around 1,100 casualties were reported.
• Back home in India, Loods affected nearly a million people in Odisha. From Himachal Pradesh and Uttarakhand to Karnataka and Kerala, recurring incidents of Lash floods, cloudbursts, and landslides were reported.
Erratic weather patterns and natural disasters have hit home and hit hard irrespective of whether you are a climate denialist or alarmist, whether you are sitting in California or Kolkata.
As some people would put it, the pursuit of capital created the problem. Can capital redeem itself by solving the problem?
A fortnight ago, nearly a hundred businesspeople — a mix of private equity investors, entrepreneurs, and corporate executives — gathered in Bengaluru to explore prospects of investing in climate-tech startups. According to organizer Shailesh Vickram Singh, the attendance overshot his expectations. Singh has been part of the venture capital world for more than a decade. He was an executive director at now-defunct Seedfund, one of the earliest domestic VC firms in the country.
He launched Climate Angels, which is now a Sebi-registered Cat-1 AIF (alternative investment fund) with a target corpus of USD 150 million, of which a small portion has already been raised. Some 300 angel investors have signed up with Climate Angels in the past year and 80 of them have made investments. The angel network has backed eight clean-tech startups so far. It started off with an INR1 crore first cheque and raised the ticket size to INR3 crore now. The fund will put in 30% and angel investors on its platform will pool the balance of the amount.
Singh is now on a road show across Bengaluru, Mumbai, and Delhi to expand the angel network. He has his talking points: As many as 29 climate-tech unicorns emerged in 2021 alone. He cites recent EV investments in India as a promising sign — charging startups Battery Smart and Statiq raised USD25 million each from Tiger Global and Shell Ventures, respectively. EV cab company Blu Smart is about to close a USD250 million round. He says India will have a bunch of climate tech unicorns in the next four to five years.
Four years ago, Singh made headlines when he launched a USD 150 million green fund, GoMassive, with Paytm founder Vijay Shekhar Sharma. He then had to step back and iterate. Singh cites the lack of investible startups at the Series A stage and beyond as a reason to keep those plans aside and launch Climate Angels to go a level deeper and focus on seeding unfunded startups in the sector. At the angel stage, Singh is finding deals and co-investors. Take a look at ClimateAngels’ portfolio companies, the amount they raised, and co-investors:
Some of the startups have seen good growth, says Singh. Beco, which sells bamboo-based home-cleaning products, clocks sales of INR3 crore a month, growing nearly eight times in a year. Sheroo Tezz does 7,000 battery swaps a day. SolarSquare positions itself as the country’s third-largest EPC player in rooftop solar.
Singh says investment activity has picked up speed in climate-tech deals. “In 2018, when we launched GoMassive, some would ask, ‘Are you mad?’. Now I see a bunch of new funds getting launched, and every major VC Wrm has one or two green investments. I missed 20 deals because somebody else had done them.”
As the table above shows, a clutch of international and homegrown investors, some of them exclusively focused on climate, have come together to make these investments. US-based investors such as Circulate Capital, Social Impact Capital, and Lowercarbon Capital have found early-stage ventures in India. A bunch of homegrown climate-focused VCs such as PE veteran Anjali Bansal’s Avaana Capital and entrepreneur Harsha Moily’s Nature Fix Climate (NFC) Ventures came up in recent years. Zerodha’s Rainmatter Foundation has been making investments for a few years now. Avaana and Rainmatter have made a string of early-stage deals. Earlier this year, Ever Source Capital launched India’s biggest climate fund, the Green Growth Equity Fund, at USD741 million, which will make growth-stage private-equity investments in renewable, electric mobility, and water-conservation projects.
The world will definitely need more. Someone like Bill Gates would argue that there is a need for a different kind of capital to address the grave challenges we face. “The venture-capital community so far has had a bad experience with green investing,” Gates said in an interview to Harvard Business Review last year. In India, Infuse Ventures, which started as a climate fund 10 years ago, broadened its scope and rebranded later. “We need to tap high-risk capital that’s structured for the super-long-term nature of the products we need,” Gates added. He pushes for zero emission, and in his own words, “It will need to be the most amazing thing humankind has ever done.”
Just this week, the country’s tech capital, the so-called Silicon Valley of the East, was inundated. Techies rode to o=ice on tractors, and a unicorn CEO, his family, and pet dog were evacuated from a Looded residential building. If August was cruel, September isn’t any better. We will badly need more angels.