Climate Tech Funding Takes New Direction in India
India's climate technology sector is witnessing a quiet revolution in funding sources. While venture capitalists remain hesitant, public sector undertakings and global investors are stepping forward with patient capital. This shift is reshaping how green innovations reach the market.
Unlikely Backers for Critical Technologies
Consider Neiox Eco Cycle, a Kerala-based startup developing carbon-negative marine coatings. The company doesn't focus on consumer trends or software solutions. Instead, it tackles the unglamorous problem of ship hull protection. Traditional venture capitalists showed little interest in this niche area.
Yet Neiox secured funding in November 2024 from Cochin Shipyard, India's largest state-run shipbuilder. The initial investment of ₹30 lakh was followed by an additional ₹75 lakh last October. This backing came through the shipyard's maritime innovation programme.
Neiox represents a growing trend. Mahanagar Gas Ltd invested ₹120 crore in Bengaluru-based EV startup 3ev for a significant stake. Varaha, another climate-tech firm, received $30.5 million from Mirova, the sustainable investing arm of French financial group Natixis.
Other examples include Hindustan Petroleum supporting early-stage technologies through its Udgam platform. Oil India has backed carbon innovation startups like Caliche and Carbonation India. These investments share a common thread: they prioritize long-term impact over quick returns.
The Patient Capital Approach
Rajan Mehta of Climate Ventures Partner explains the rationale clearly. "Traditional VC models favor high-risk, hyper-growth businesses. Most climate technologies need patient capital and longer development periods. Legacy firms and PSUs invest to hedge transition risks and build relevance, not chase fast exits."
This approach contrasts sharply with venture capital priorities. Climate tech startups face particular challenges. They require substantial upfront investment. Regulatory approvals take time. Government adoption often determines success. These factors discourage traditional venture funding.
Data reveals the scale of this funding gap. India has seen 642 climate-tech startups founded in three years. Only 61 have reached Series B funding or beyond. Meanwhile, 678 have shut down since January 2023. Total climate-tech funding dropped to $657 million in 2025 from $1.5 billion in 2023.
Strategic Investments Across Sectors
Cochin Shipyard's investment in Neiox demonstrates strategic thinking. The startup converts industrial air pollutants into advanced additives for marine paint. This technology could revolutionize ship coatings while addressing environmental concerns.
Globally, shipping aims for net-zero emissions by 2050. Current hull protection requires multiple toxic layers. Neiox claims its single-layer, non-toxic coating tackles both corrosion and biofouling. For Cochin Shipyard, this represents risk-adjusted technology exposure with compliance benefits.
Mahanagar Gas's move into electric mobility follows similar logic. The company acknowledges that electric vehicles won't immediately reduce CNG demand. Yet their investment in 3ev represents a long-term equity bet on energy transition.
3ev focuses on battery-as-a-service for commercial electric vehicles. The startup leverages MGL's existing infrastructure in Mumbai while operating independently in other cities. This partnership allows gradual expansion without overwhelming either company's resources.
Global Capital Joins the Movement
International investors bring different perspectives to Indian climate tech. Less constrained by domestic exit timelines, they're backing startups tackling complex problems like carbon sequestration.
Varaha's success illustrates this trend. The startup secured Google's first carbon-removal agreement in India, followed by a similar deal with Microsoft. With biochar credits priced around $150-160 per tonne, these agreements represent significant value.
Other startups benefit too. Arya.ag raised ₹725 crore in Series D funding led by global private equity firm GEF Capital Partners. The company reduces post-harvest losses through farm-gate infrastructure.
Pradeep Singhvi of Grant Thornton Bharat observes the global perspective. "International investors are greening their portfolios. Supporting Indian climate projects helps meet sustainability targets while accessing long-term growth."
The Venture Capital Conundrum
Venture capital remains concentrated in familiar areas. Since 2022, roughly $6 billion has flowed into electric vehicles and mobility sectors. This produced unicorns like Ola Electric and Ather Energy. Yet these represent exceptions rather than the rule.
Most climate-tech funding goes to adaptation-focused products. These offer clearer customers, shorter payback cycles, and easier monetization. Mitigation technologies struggle to attract similar interest.
"Until carbon markets mature and pricing becomes predictable, many venture investors will remain cautious," notes Singhvi. The scaling gap persists despite growing startup numbers. Less than 3% of India's 800 viable climate-tech startups have raised Series B or beyond.
A Broader Investment Shift
Global financial institutions increasingly view climate risk as material financial risk. BlackRock CEO Larry Fink predicted climate unicorns would emerge around green hydrogen, agriculture, and industrial decarbonization. This prediction is becoming investment reality.
BlackRock and Temasek now back companies like Antora Energy and ConnectDER. These investments signal private capital's move toward climate infrastructure beyond traditional venture comfort zones.
For shipyards, utilities, and asset managers, climate technology represents more than environmental responsibility. It's becoming a hedge against operational disruptions, regulatory changes, and market shifts. Whether venture capital eventually follows this patient capital approach will shape India's decarbonization journey.
The funding landscape is transforming. Patient capital from unexpected sources is filling critical gaps. This shift may determine who builds and owns India's green transition in the coming decades.
