The Climate Capital Crunch

India's clean-tech start-ups are unable to scale in the absence of patient capital. Investors and policymakers must work together to keep the cash flowing

- Nandini Keshari

With climate action gaining momentum in India, a pack of clean-tech start-ups has taken off the blocks, their focus ranging from renewable energy to electric mobility. But to keep up with the global frontrunners in the sustainability race, these start-ups will need to find a way around a major stumbling block: capital.

And that's no mean task, because, compared to fin-tech or deep-tech ventures, start-ups in the clean-tech space struggle to attract funds due to large capital costs, growth concerns, regulatory uncertainty and limited scalability.

In 2024, energy transition attracted $2.1trn in funding globally, 11% higher than the previous year, according to Bloomberg New Energy Finance's "2025 Energy Transition Investment Report". But this statistic hides a perturbing downtrend: the investment growth through the preceding three years was two-and-a-half times higher, ranging between 24% and 29%.

“Even this dwindling investment is flowing largely to established solutions, with China accounting for most of the growth. Meanwhile, the clean energy and the tech sector in the rest of the world is either stagnating or slowing,” says Pratyush Thakur, investment director and country head of Blueleaf Energy, a pan-Asia renewable energy platform that develops, finances and operates renewable energy and storage assets.

Out of Steam

Climate-tech companies raised a mere $50bn in private and public equity in 2024, a 40% decline from 2023. It was the third consecutive year of contraction for the sector. Further, out of over 800 operational climate-tech start-ups, only 25% have been able to secure venture-capital funds.

A recent study by IIMA Ventures and the Mitsubishi UFJ Financial Group points out that over the past decade clean-tech has garnered about $3.6bn in funding whereas fin-tech has attracted more than $19.3bn.