Avaana Capital secures $70 mn first close commitment for climate and sustainability fund 
Special 
Avaana Capital secures $70 mn first close commitment for climate and sustainability fund Avaana Capital, a climate and sustainability-focused investment firm, has announced that it has secured commitment of $70 million for the first close of its second fund.
Business Today was first to report in February that the Mumbai-based company was nearing the first close of the fund.
The firm is targeting a total corpus of $100-125 million for the fund named Avaana Climate and Sustainability Fund. It will focus on investments in three sectors that are responsible for 90 per cent of India's emissions -- energy transition and resource management; mobility and supply chains and; sustainable agriculture and food systems.
The LP base for the fund consists of Small Industries Development Bank of India (SIDBI), Self Reliant India (SRI) Fund, the UK India Development Cooperation Fund (UKIDCF) and marquee corporates such as Godrej Group, Murugappa, Torrent, Tsadik, and Bellerive Capital, among others.
Led by Anjali Bansal, Swapna Gupta, and Shruti Srivastava, the fund will invest in tech-driven climate solutions looking to solve climate risk mitigation, adaptation and resilience building. Since 2018, Avaana has backed over 20 early-stage start-ups. Its current portfolio includes Eeki Foods, Aerem, Kazam, sentra.world, FarMart, Eggoz, Ninety One 91, Turno and Terra.do.
“With significant global capital flowing, supportive policies, corporate interest and wealth of entrepreneurial talent in the climate sector, India's climate-tech story is rapidly progressing. At Avaana Climate and Sustainability Fund, we evaluate over 200 new climate opportunities every quarter,” Bansal said.
In the second fund, Avaana is looking at opportunities across the climate spectrum, including greenhouse gas emissions, grid storage and stability, battery technologies, regenerative agriculture, water management, energy access, and Scope 3 (indirect emissions from a company’s value chain) measurement, monitoring and reporting.
Climate tech as an attractive asset class for pure-play VC investors, and not as impact funding or ESG investment targets, is beginning to gather steam.In the midst of a precarious global investment scene, climate-tech venture capital (VC) managed to beat the odds and delivered a whopping $70.1 billion in investments in 2022, marking an impressive 89 per cent surge from the previous year, according to a report by HolonIQ, a global impact intelligence platform. Such investments are becoming popular in India, too. The country received as much as $6.2 billion in investments in 2022—$3.7 billion more than the $2.5 billion in the previous year, according to the report. However, it’s no secret that most of these funds are directed towards big renewable energy infrastructure and storage projects, and mobility. But VC investment in pure-play early-stage climate-tech start-ups are still elusive—a mere whisper in the wind.
From renewable energy to sustainable agriculture, Indian start-ups are poised to lead the charge in developing innovative solutions that can help mitigate the effects of climate change and build a more sustainable future.
Critical to our economy and growth, India is spearheading one of the most robust climate actions through Nationally Determined Contributions, which includes an ambitious programme for transitions to clean energy in the world. The Economic Survey 2023, which was tabled in the Parliament, stated that India has enhanced its climate ambition manifold and has embarked on a long-term strategy towards a low GHG emission-based development, despite the adverse impacts of Covid-19 on the economy.
The 2023 Union Budget advocated for 'Green Growth' on the back of India’s net zero targets, which the country seeks to attain by 2070.
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