SUMMARY
VAIA Climate Studio is looking to raise a maiden fund of $25 Mn from marquee investors and family offices, among others, and has also closed a small first round
The venture studio is aiming to create at least four climate-focussed startups in FY24 by incubating its own ideas, and then invest in their Seed rounds with an average ticket size of $250K-$500K
The climate studio business, which is a fund model, is CaHa Capital’s third vertical, launched alongside its existing verticals – the boutique investment firm and ESG advisory
Bengaluru-based boutique investment advisory firm CaHa Capital has launched a climate tech and climate finance-focussed venture studio, VAIA Climate Studio, to build startups from scratch and then invest in them and scale.
VAIA Climate Studio is also looking to raise a maiden fund of $25 Mn from marquee investors and family offices, among others, and has already closed a small first round. The company did not disclose the names of its investors.
Speaking with Inc42, CaHa Capital’s founder and managing partner Shruthi Cauvery Iyer said that VAIA Climate Studio is aiming to create at least four climate-focused startups by the end of FY24 and then invest in their Seed rounds. VAIA Climate Studio’s average ticket size will be in the range of $250K to $500K.
Founded in 2020 by Iyer, CaHa Capital is focussed on investment strategy, capital deployment, and portfolio management. The climate studio business is the third vertical, launched alongside its existing verticals – the boutique investment firm and ESG (environmental, social and governance) advisory.
It is pertinent to note that a venture studio is different from a venture capital (VC) or an accelerator and doesn’t just incubate or fund existing startups. Startups born out of venture studios are the result of the latter’s ideas, which are incubated and developed in-house. VAIA Climate Studio likely happens to be the first climate-focussed venture studio in the country.
“Climate has been a major part of our DNA and our long-term vision is to help reverse climate change. For the fund model, we have been researching different climate investment ideas and we wanted something that would support innovation at a very early stage and also high-quality innovation and entrepreneurs,” said Iyer.
“While traditional VC firms are investing in climate startups, we are still figuring out if that really works, given the unique requirements of the sector. Our hypothesis is that the venture studio model is highly suited for a sector like climate because not everybody graduating from a premier engineering school can necessarily become a climate entrepreneur,” she added.
As a result, VAIA Climate Studio has been formed, which would first identify innovative ideas within climate tech and climate finance, then test and iterate them through research and market testing, build startups, onboard cofounders, and create MVP.
Next, it would invest in the startups’ seed funding round and get external investors to further invest in them. With more people coming on board, VAIA Climate Studio would dilute its equity holdings in the startups but would keep holding at least a 20% stake.
VAIA Climate Studio will also continue to engage with these startups that are built out of the studio.
The venture studio is already building one startup in-house. Currently, it has 60 ideas that VAIA Climate Studio is planning to build and scale.
It is looking to hire ambitious, honest, and “well-educated” aspiring entrepreneurs, who care about tackling climate change, as the cofounders of the startups that would be born from the venture studio, Iyer said.
VAIA Climate Studio will select five to six climate ideas every year to incubate after careful research and diligence. Over the next three years, the venture studio aims to fund about 15-16 startups.
“There is a huge need for investment from now till 2040. In climate finance alone, we are looking at a need for an additional $85 Tn. So, more capital will continue to be raised and deployed in the climate sector, and both in terms of philanthropic capital and private investments, there will be strong growth year-on-year,” said Iyer, talking about the future landscape of investments and innovation in the climate tech space.
In the global ecosystem, VAIA Climate Studio’s peers include Idealab Studio, Atomic, Ezra Climate, and Factor[e] Ventures, among others.
As per a report, the climate tech market, which was pegged at over $12.5 Bn in 2021, is expected to grow at a CAGR of around 24% between 2022 and 2028.
