Avarna Capital, an early-stage investment firm that has backed startups in the consumer, food, and agriculture sectors, has final closed a dedicated fund focused on climate and sustainability at $135 million.
Originally aiming to raise between $100 million and $125 million, the fund reached its first close of $70 million last June. Through this specialized fund, Avaana Capital plans to invest in 20 to 25 early-stage companies.
The average size of the first check will be in the range of Rs 10 million to Rs 30 million, with plans to double it if the investment is successful.
According to Anjali Bansal, founding partner at Avaana Capital, climate change and sustainability will drive major changes in social systems, including digitalization, which has had a huge social and economic impact over the past few decades. That’s what it means.
“The greatest investment opportunities and subsequent returns come from innovation in areas where great change is occurring. If you look at two megatrends currently happening in the world…the first is artificial intelligence and its associated and the second one is climate change,” Bansal told ET.
“The theory behind creating the Avaana Climate Fund is that just as digitalization has been the story of the last 30 years, changing the way we live, work and interact, sustainability will be the next solution. “This is a major change in our social system,” she added.
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Avarna Capital will provide early-stage funding to startups with “core innovations” focused on building in areas such as energy transition, supply chains, resources, industrial decarbonization, and food systems. Bansal said. “Let’s think about energy security, food security, and markets.” The coalition that brings it all together…our filters are centered around mitigation, adaptation, and resilience. We screen startups in a technical way to understand how they solve these problems,” she said, adding that it follows the Green Climate Fund (GCF) framework. Ta.
GCF, the world’s largest climate finance fund established within the United Nations Framework Convention on Climate Change, is also one of the Avaana Sustainability Fund’s sponsors.
Other limited partners in the fund include the US International Development Finance Corporation, the UK Government through the UK India Development Cooperation Fund, the Self-Reliant India Fund managed by SBI Ventures, the Small and Medium Enterprise Development Bank of India, the Azim Premji Trust and several others. Includes large companies. .
Through this new fund, the company has already backed six startups. These include Kazam, a company that provides charging products and services for electric vehicles; Sentra World is a technology platform that enhances the ESG (environmental social and governance) of industrial businesses. and agritech startup Eeki Foods.
climate change
In recent years, several specialist climate change-focused risk capital investors and generalist venture capital firms have increased their focus on this area.
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“We have been told that this is probably one of the most difficult funding environments in the past few years. But let’s be honest, raising money is never easy. Later on, we went through a period of reduced liquidity,” Bansal said. “But what worked for us was a very focused, disciplined thematic strategy. We built a team with significant capabilities and created our own captive and investor base that aligned with that strategy. I collected the base.
On May 20, ET reported that risk capital investors are backing startups in the climate technology space in India, especially early-stage startups, due to supportive policies and expanding consumer base.
In April this year, IIT graduates and veteran investors Ruchila Shukla and Kartik Chandrasekhar launched a venture capital firm, Synapse, to invest in climate and health technology startups. The company aims to raise $125 million in initial funding.
Eversource Capital, which closed India’s largest climate change fund in 2022, will open for a new fund to support companies in the water, food, agrichain and recycling subsegments, according to a Bloomberg report in May. The company reportedly planned to raise at least $1 billion. Broader climate themes.
In November last year, ET reported about former KKR India CEO and veteran investor Sanjay Nayar entering the space in partnership with Mumbai-based Peak Sustainability Ventures.
Climate technology startups raised nearly $2 billion in 226 rounds in 2023, according to data intelligence platform Tracxn. So far in 2024, it has raised $1.2 billion through 137 rounds.
A report from IIMA Ventures, which has invested in more than 100 climate technology startups, shows that two-thirds of funded startups have secured a seed round, and early-stage funding is becoming more active. It is said that there is. However, there is a lack of funding during the growth period. “Less than 3% of startups raised Series B or higher funding, indicating the need for larger late-stage investments to help promising solutions scale,” the report said. are.
