4 observations on Indias climate tech and sustainability investments from Anjali Bansal of Avaana Capital – KrASIA

Mumbai-based Avaana Capital is one of the few venture capital firms to focus on climate action and sustainability in India. It invests in early-stage sustainable venturesstartups building technology-driven solutions for mitigating and building resilience against climate change.

Founded in 2018 by veteran investor Anjali Bansal, who previously was a partner and managing director at TPG, Avaana has backed more than 35 startups, including hydroponics vegetable grower Eekifoods and air purification system developer Praan.

In an interview with KrASIA, Bansal talked about why she thinks sustainability will become as integral as digital technologies for the local startup community.

The following interview has been edited and consolidated for brevity and clarity.

KrASIA (Kr): What is Avaanas thesis around sustainability?

Anjali Bansal (AB): We believe if you apply technology and innovation to large-scale problems, you can get solutions and impact at scale while creating supernormal returns. For the next 20 years, climate change will be the biggest problem for the world. I feel that we owe it to our next generation to leave behind a better planet. Beyond that, I believe sustainability is going to become as integrated as digitization in any business model.

Two decades ago, most large companies didnt consider technology to be core to their business. Technology was a function that sat somewhere on the peripheries like ERP (enterprise resource planning) systems. Today, most companies are digitized and technology is embedded horizontally across business verticals.

Digital technologies defined the evolution of companies in the last 20 years. For the next two decades, sustainability will define new trajectories. It will be integrated into business models across the value chainwhether it is product development, R&D, manufacturing, or supply chain.

We invest in early-stage tech companies that address three pillars of sustainabilitymitigation, adaptation, and resilience (while facing climate change)and are at the commercialization stage.

Kr: Why do you think sustainability will become as critical and integral as digital technologies?

AB: There are three reasons. Global capital is shifting toward ESGenvironmental, social, and governance. When capital moves, action happens.

Second, consumer preferences have started shifting toward opting for affordable, sustainable products.

Lastly, there are some employees, particularly the younger lot, who are increasingly seeking to work with companies that are more sustainable and responsible.

Consumers, employees, and shareholders have shown their preference. Hence, we believe companies will have to shift their business strategy.

Kr: Which themes do you focus on?

AB: Food and consumption, mobility and supply chain, and resource management.

Within food and consumption, a lot is happening in agriculture on the consumer side, with products that are better for the consumers as well as the planet. The agriculture industry is a big carbon emitter, so there is an opportunity to mitigate climate change by reducing its carbon footprint and wastage. Sustainable agriculture is taking off in the country due to a combination of factorsentrepreneurial talent, availability of capital, policy support, and digitization.

The mobility and supply chain segment is another major emitter of carbon. We look at ventures that work on large-scale digitization of the supply chain across industries. Digitized supply chains lead to higher efficiency, reduced wastage, better circularity, and income enhancement for stakeholders. EVs are also in this bucket.

Under resource management, we back startups that work on transitions to green energy, or that are building solutions for land, water, air, and waste management to cultivate a circular economy.

Kr: Do you think sustainability will become a priority in Indias startup ecosystem?

AB: I see a positive movement among entrepreneurs who are looking to solve the next big problem. There is more action outside India, like climate-focused funds being set up. In India, we dont have many investors in this space. Capital remains the biggest challenge for climate tech and sustainable startups. But that will change, once we start seeing successes emerge.

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4 observations on Indias climate tech and sustainability investments from Anjali Bansal of Avaana Capital - KrASIA