Exclusive: ZeCa Capital’s INR 150 Cr Sustainability-Focussed Fund Gets SEBI Nod

Sustainability-focussed venture capital firm ZeCa Capital has received approval from the Securities and Exchange Board of India (SEBI) to launch its maiden fund with a corpus of INR 150 Cr.

Having already received commitments from a few LPs, including Atria Group chairman Sunder Raju and a few CXOs in the sustainability space, the VC firm is expected to announce the first close of the fund at about INR 40 Cr this month.

Floated last year by serial entrepreneur and investor (former partner at Venture Garage) Pawan Raj Kumar, along with ex-Cuemath executive Aakash Kushwaha and former RedSeer CFO Shreya Ravi, ZeCa Capital aims to invest in early-stage sustainable startups across electric mobility, renewable energies, agritech, circular economy, consumer brands, and SaaS sectors.

The fund, a Category II AIF, will invest in pre-seed and seed funding rounds of 20 to 25 startups in the next four years. The average ticket size will range between INR 2 Cr and INR 3 Cr.

“Our sweet spot is when a company is raising half a million to a million dollars at a valuation between $3 Mn to $6 Mn,” ZeCa Capital partner Kumar told Inc42. 

The VC firm made its first investment in sustainability-focussed SaaS platform, GreenStitch, earlier this year.

“We are placing only one big restriction on ourselves right now in terms of making investments. Unless a company is into deeptech, we want to see some customer love in the form of revenue and repeats to infuse capital there. We don’t want to fund research,” Kumar said on the investment criteria.

ZeCa Capital’s Sustainability Pathway

Talking about the idea behind launching the firm, Kumar said he wanted to start his own sector-focussed fund after being an investor for years. The recent developments in the sustainability space matched his personal inclination towards sustainable living, giving birth to ZeCa Capital, in which ‘ZeCa’ stands for Zero Carbon.

The VC firm has divided its investments into four buckets – technology, software, consumer, and circular economy. Under technology, it will invest in startups involved in building tech for electrification of transport, renewable energy, and agriculture. 

Even though funding EV startups is not anymore the top choice for most Indian VC firms, ZeCa Capital aims to invest in startups building efficient batteries and providing financing solutions. ZeCa Capital is currently evaluating a few fintech startups focussed on the EV space.

Given the nature of the sector, most of the investments by ZeCa Capital are expected to be in B2B startups, except for sustainable consumer brands, Kumar said.

Sustainability Driving Investments In Indian Startups 

As India aims to achieve its net-zero targets by 2070, sustainability and carbon neutrality have emerged as key themes in the country’s startup ecosystem. Within this, EV, solar energy and circular economy are among the subsectors that are abuzz with activities. 

This has given birth to several startups and even a few VC funds that are focussed solely on the sustainable space. 

For instance, Nikhil Kamath’s investment firm Gruhas and Bengaluru-based real estate major Brigade Group recently launched INR 300 Cr Earth Fund for investing in proptech and sustainability-focussed startups.

In October last year, Avaana Capital marked the final close of its early-stage fund at around INR 1,135 Cr. 

Climate-focussed Green Frontier Capital also launched Green Frontier Capital India Climate Opportunities Fund with a target corpus of INR 1,500 Cr last year.