Clean technology investments are still at a very nascent stage in India – with only two VCs really seriously involved in the space. I met with both of them during my trip – Nexus in Bombay and DFJ in Bangalore. Others are starting to look at the space, and in many of our meetings with other VC and PE firms, they mentioned trying to currently get their head around how best to deploy capital in the emerging Cleantech space.
In terms of the current Cleantech landscape, there is already a decent installed base of Wind and Hydro power, with more expected to come online in the future. Solar has received a good push from both industry and government, with literally everyone we met citing the 2020 solar …. There are also a decent number of waste-to-energy and biofuel companies, however the problem here is with scalability. Since these companies source locally, getting feedstock poses a challenge for scale. In order to avoid getting squeezed by suppliers of waste such as agriwaste, some companies have had to adopt a diversified strategy where 50% of their waste comes from the market, while the other 50% they need to grow captively.
Broadly speaking, start-ups in the Cleantech area are still in infancy. There still have been no dominant players emerge, which is a good thing if you are a start-up like PK Clean. Furthermore, in the Indian context these start-ups are not focused on the innovation side, but the deployment side. As Mohanjit Jolly explained to me - India is going from nothing to something, and not looking for “best of breed” innovations. The industry doesn’t have luxury to innovate, and just needs to put something in place in order to bring energy to the masses. Hence, from a venture capitalists perspective, Cleantech in India is more of an execution play than a technology play.
The following article from India’s Financial Express newspaper presents a great overview of the current state of Cleantech investment in India. http://www.financialexpress.com/news/2010cleantechgetspetraction/593431/0 Coincidentally, the article came out the same day as the start of our Trek, and since I had subscribed to Financial Express on my Kindle for my 2 weeks in India – I was excited to read this on the way to my first meeting. The photo below is of the article on my beloved Kindle:
