Environment Tech Funding- Solar Struggles As Energy Storage & Mobility Dominates

Tracxn, a leading platform for tracking startups and private companies has released a detailed report on Environment Tech funding.  the report has some interesting insights in the Indian context.

Providing data backed analysis, the report points out that the Indian Environment tech sector has raised total funding of $7.3 billion till date. India’s environmental technology funding saw substantial growth between 2018 and 2022, surging from $0.23 billion to $2.47 billion. Environment tech funding in India peaked in 2022 at $2.47 billion.

• However, it experienced a decline to $1.68 billion in 2023, a 32% decrease from 2022. As of the first three months of 2024, the funding stands at $0.24 billion.
• Despite the global increase in funding, India’s share remained consistently low, ranging from 0% to 7%.
• There was a significant spike in India’s share in global funding in this space, to 5% in 2019 from 1% in 2018.
• India’s share in global funding was 7% in 2022, the highest since 2011.
• Bengaluru ($2.7B) tops the list in this space in terms of all-time city-wise funding, followed by Delhi ($1.2B) and Mumbai ($942M).
• This space has seen 14 IPOs and 25 acquisitions to date.
• Only 5 companies reported $100M+ rounds in 2023.
• Only one Unicorn has emerged in India so far – Ola Electric.

What is interesting is the seeming lack of solar focused startups or firms in the list. While the Reliance Acquisition of Sterling and Wilson Renewable in 2022 stands out, beyond that, other than a few deals focused on Solar DERMS (Distributed energy resource management system), and FMO Netherlands backed funding for Avaada, there is not much to show in the hundreds of deals in the past 5 years.

That is quite a contrast to the merry ride solar stocks have enjoyed in the past couple of years on the stock markets, from developers to equipment suppliers. With exponential returns, one wonders if the next report will tell a different story. The Tracxn report highlights mini-grid operator Husk Power Systems as a likely Minicorn candidate, or likely to make it to $1 billion valuation in the medium term, while   Avaada is the only large solar firm likely to become a unicorn in the short term.

The absolute dominance of battery, charging and related firms is perhaps understandable, with their lower policy overhang, something investors prefer. But seeing the string of solar IPO’s in recent months, and more coming soon, we suspect the story will change sooner than later.

You can view the detailed report here