Rana Rosen on the rising cleantech venture funding in India by VCs.
Private equity (PE) investors, including early-stage venture capitalists, have poured more than $433 million (Rs1,775 crore) into environment-related businesses, primarily wind energy and clean fuel, in the country since 2001.
So far, investors have put down an average of $33 million into companies that, for example, turn sugar into clean fuel or make cars that run on an electric battery. Overall, investments favoured wind energy, which saw four companies receive funding worth $224 million, and clean fuels, where five companies got $141 million (see accompanying table).
Most investors are driven by the domestic need for power and water in India, and making that energy supply sustainable as the country develops. “People are looking at India as a market for things, not as a source for things,”
“India has already seen its wind industry develop rapidly, and looking at China, where solar production and installation are increasing rapidly, India certainly has great potential here,” says Dan Kammen, professor in the energy and resources group at University of California, Berkeley. Many investors see India’s potential in tapping solar energy as even greater than wind, given that its sunny days are around 93% of the year and can be more easily distributed. Companies doing work in biofuels also will continue get attention.
“Anyone who has a biofuel plan, they are sold out,” said Buch. “They sell every litre they manufacture.”
This continues to show the growing market for energy in India. Energy efficiency, Uranium, Wind, Solar, Bio Fuels, Coal, Gas and Oil. India needs all of these and some more .
Irrespective of the correct number it is prudent to remember that VC investing is always the tip of the iceberg in most markets. One good source for this fact is the annual Inc 500 listing. This year they have taken a big step forward and created the Inc 5000 listing. The funding strategy for these high growth companies? Only 7% of them relied on VC funding. If this is true for the US, then India should be even lesser considering the smaller VC market.
The end point: Using the above reasoning, the clean tech venture market in India may have received $8-$9 billion dollars($433m*20 times) from 2001 till now.