Early-stage investment to funding winter: climate startup landscape in first half of 2023

While electric mobility stood out as the dominant sector, accounting for over 60% of climate startup funding; solar power, green fintech, and deeptech startups also attracted investor attention.

Early-stage investment to funding winter: climate startup landscape in first half of 2023

Monday July 10, 2023,

4 min Read

In the first half of 2023, Indian climate startups experienced a mixed bag of outcomes, with early-stage activity remaining stable, and growth-stage deals facing the impact of a funding winter.

We dive deep into the current state of climate startup funding, highlighting some exciting sectors, exploring investor interest, and shedding light on the challenges and opportunities that lie ahead.

Shifting funding landscape

It's a bit of a tale of two worlds in the climate startup funding landscape. Early-stage deals are still flowing, which is great news. But when it comes to those big deals exceeding $50 million, they're becoming as rare as it has become to see a unicorn these days.

Early-stage startups are also not immune to funding winter blues, where the investors are supporting their portfolio companies with additional funds. Notably, existing investors have taken the lead in funding rounds for companies like RACEnergy, Probus Smart Things, Satyukt Analytics, and Bounce Infinity, highlighting their commitment to supporting these ventures.

Traditionally, climate startups accounted for less than 5% of total startup funding in India. However, in light of the substantial reduction in startup funding across the board, climate startups now claim around 10% of the total startup funding.

Thriving sectors and investor interest: Electric mobility stands out as the dominant sector, accounting for over 60% of climate startup funding. From charging infrastructure to last-mile mobility companies like Magenta Mobility, Blue Smart cabs, and Zypp, the electric mobility space has garnered significant attention. Battery technology follows closely, with Log 9 Materials driving funding in this domain. Additionally, there is growing interest in hydrogen startups, such as Ossus Biorenewables and NewTrace, as hydrogen emerges as a vital lever for decarbonisation in industries like cement and steel.


Solar power, an essential renewable energy source, has also attracted investment. Solar module manufacturers and solar EPC companies like Prozeal Infra and Navitas Solar secured funding from family offices, emphasising their crucial role in providing patient capital to solar sector, where early-stage funding is difficult to obtain. However, once these companies grow to a certain size, there is a lot of interest by private equity investors, as was demonstrated by mega fundraise of  over $250M of Clean Max solar and Serentica Renewables. Given the established nature of these two companies, we have not included their funding as part of climate startup funding landscape.

There were a number of deals in Green fintech, with startups such as solar financing NBFC Aerem and the EV sales and financing platform Turno, driving the importance of financial solutions in driving the uptake of electric vehicles and solar modules. 

Deeptech has emerged as a focal point for investors, with companies like Uravu Labs, Zero Cow Factory, Metastable Materials, and NewTrace successfully raising capital. These innovative startups are at the intersection of cutting-edge technology and climate solutions, attracting attention from venture capitalists seeking disruptive opportunities.

Additionally, there have been two notable growth stage funding deals--Ecozen (solar based cooling) and Atomberg Technology (Energy efficient fans), which raised funding from global investment funds Nuveen and Temasek, respectively.

Corporate and Venture Capital Involvement: The investors mostly comprised of angel networks, early-stage mainstream and impact VC funds, corporates venture capital arms and family offices. Corporate venture and family offices are important pillars of climate startup funding, contributing to almost 30% of total funding.

The road ahead

Looking ahead, venture capital investors are eager to evaluate climate deals. In H1 23, a number of climate investors, including Avaana and Omnivore, announced that they were raising new funds to invest in climate startups.

However, startups with substantial revenue and significant steps towards commercialisation remain elusive. Currently, venture backable startups primarily exist in three sectors: electric vehicles, deeptech, and green fintech. The nascent carbon credit market, buoyed by regulatory action, also presents opportunities for venture capital investments.

(Bharti Krishnan is the founder of Fine Train, a boutique advisory firm for climate-driven businesses.)

Edited by Megha Reddy

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)