SIDBI Secures $24.5 Mn For Its Maiden Climate Tech Fund

Small Industries Development Bank of India (SIDBI) has secured $24.5 Mn from Green Climate Fund (GCF) for its maiden anchored sustainability and climate focussed fund Avaana Sustainability Fund (ASF).

The development came during the 38th meeting of the GCF Board in Kigali, Rwanda on March 6. 

ASF is a $120 Mn venture capital fund that aims to invest in early-stage climate tech startups in India. With the $120 Mn kitty, the fund will be investing in startups and MSMEs in sectors like sustainable resource management, mobility and supply chains, and sustainable agriculture and food systems, SIDBI said in a statement. 

The fund will also be looking to invest in low-carbon and climate-resilient businesses. 

“Anticipated outcomes include significant contributions to climate change mitigation, adaptation, and the enhancement of resilience in vulnerable sectors of the Indian economy,” the statement added. 

The Green Climate Fund is a key component of the historic Paris Agreement and also the world’s largest climate fund. According to GCF, the fund has been in the pipeline since February last year. 

With a total value of $120 Mn, the fund will look to cull 4.7 Mn emissions. The UN body classifies the fund as Category ‘C’ fund, meaning it has zero or minimal adverse risks associated. 

“ASF’s strategies include investing in low-carbon and climate-resilient businesses, adding value for climate and sustainability leaders, establishing a virtuous cycle of sourcing and value addition for the larger ecosystem, and focusing on social, economic, and environmental impact with tailored investment strategies across various sectors,” GCF said in a blog post.   

The fund announcement comes at a time when climate tech-focused funding in India is witnessing a muted growth. Inc42 data till November 2023 shows that funding in the Indian climate tech startups has touched $4 Bn since 2014, slightly higher than the $2.7 Bn raised until 2016. However, the trend seems to be changing in 2024. 

Interestingly, SIDBI’s fund is the second climate tech focused fund to be launched this month. On March 7, Climate tech venture studio NOW announced its official launch in India with a dedicated $2 Mn fund to invest in early stage Indian deeptech startups. 

The funds will be looking to capitalise on the promise that the industry packs. As per a report, the climate tech market in India and the larger South East Asia (SEA) region is projected to grow to a market size of $350 Bn by 2030.