Avaana Capital announces final close of $135 million fund to invest in climate tech startups

Avaana Capital, a venture capital firm focused on climate solutions, has announced the final close of its $135 million Avaana Climate and Sustainability Fund.

The fund is aimed at supporting early-stage startups that develop innovative solutions to address climate change, with a specific focus on sectors that significantly contribute to India’s carbon emissions.

The fund seeks to accelerate India’s transition to a net-zero economy by investing in startups working in three key areas: energy and resource management, mobility and supply chains, and sustainable agriculture and food systems.

These sectors account for 90% of India's carbon emissions, making them crucial targets for reducing environmental impact.

Institutional support and investment partners

The Avaana Climate and Sustainability Fund has garnered strong backing from several major institutional investors. Leading this group is the Green Climate Fund (GCF), the world’s largest climate-focused fund, which has made its first direct investment in India through this initiative.

Other notable backers include the U.S. International Development Finance Corporation (DFC), the UK Government through the UK-India Development Cooperation Fund (UKIDCF), the Self-Reliant India (SRI) Fund, Small Industries Development Bank of India (SIDBI), and the Azim Premji Trust, alongside several large corporate supporters.

Investment strategy and focus

Avaana Capital plans to invest in 20 to 25 early-stage startups, with an initial investment range between Rs 10 crore to Rs 30 crore per company.

The firm also retains the flexibility to increase its stake in companies that show significant progress. The focus is on fostering cutting-edge technologies that have the potential to revolutionize sectors critical to India's sustainability goals.

Anjali Bansal, Partner at Avaana Capital, highlighted the importance of innovation in climate action, stating, “The support from leading global and domestic institutional investors underscores the importance of innovation in driving climate action and delivering long-term impact. The Avaana Climate and Sustainability Fund will help build the next generation of climate-first companies to make meaningful progress toward a sustainable future."

Path to India’s net-zero transition

India is projected to require over $10 trillion in investment by 2070 to achieve its net-zero targets. Avaana Capital’s fund is part of a broader effort to drive innovation in climate mitigation and adaptation, not only helping India on its path to net-zero but also creating scalable models for other emerging markets.

Kavita Sinha, Director at the Green Climate Fund’s Division of Private Sector Facility, emphasized the alignment between Avaana's focus and the GCF’s vision, stating, “Avaana’s focus on transformative technologies in critical sectors will provide climate-aligned solutions to people and support India’s climate ambitions. This partnership will accelerate India’s net-zero journey and create scalable models for other emerging markets facing similar challenges.”