Impact investment, funding ventures which deliver positive social outcomes alongside strong financial returns, is steadily gaining momentum in India, with climate tech emerging as a key theme. Between 2021 and 2024, more than 15 funds have been launched by venture capitalists, with many prioritising climate technology, according to Inc42 data. Leading the charge are VC firms like Unitus Ventures, Capria Ventures, Asha Ventures, Omnivore and Transition VC, among others.
Among the early adopters is Green Frontier Capital, a US-based climate tech VC fund led by Wall Street veteran Sandiip Bhammer. The fund applied for an AIF (alternative investment fund) licence in India in 2020. Then Covid-19 hit the world, and launching an AIF was not possible. Bhammer, the founder and managing partner, was not daunted and decided to take the FDI route. Green Frontier entered the Indian market in 2020 through foreign direct investment (FDI) and has deployed $30 Mn across 10+ companies in four years, with an average ticket size of $2.4-2.5 Mn.
Its portfolio spans transformative startups, including BluSmart Mobility, Chupps, ElectricPe, Euler Motors, KisanKonnect, Nutrifresh, EMotorad, RAS Luxury Oils, Revfin Services, Zero Cow Factory, Project Clean Food and Project Clean Ocean. The fund exited BatterySmart with 18x returns within three years. It is now eyeing another significant exit.
In November 2024, Green Frontier Capital reached another milestone and launched its first India-based CAT II AIF under the Securities and Exchange Board of India (SEBI). The Green Frontier Capital India Climate Opportunities Fund, India’s pioneering climate tech VC fund, comes with a target corpus of INR 1,500 Cr, has secured an anchor investor and aims for a first close of $50–60 Mn by Q1 (January-March) 2025.
An alumnus of Boston College, Cornell and Stanford, Sandiip Bhammer has been on Wall Street since 1994 and headed investments across CLSA, HSBC, Citigroup and many US-based hedge funds. He also helped mobilise more than $50 Bn of capital in India before 2000.
After spending years as an investor in public and private markets, he shifted gears in 2020, embracing academia at the University of Massachusetts, Amherst. Bhammer taught equity investing, focussing on ESG (Environmental, social and governance) and mentored Indian startups.
“Climate investing was gaining momentum in the US, but no one was betting on it in India. That presented a huge opportunity. We entered the Indian market early, leveraging our U.S. networks and based on our earlier success. Without that groundwork, we would not have a sound track record. Thanks to that, we are now considered India’s pre-eminent climate investors,” said Bhammer.
As part of Inc42’s ongoing Moneyball series, Bhammer had an exclusive interaction, delving deep into the fund’s investment strategy, the competitive advantage the new fund offers to its portfolio companies compared to traditional VC funds, the climate tech opportunity in India, funding trends in 2025 and more. Here are the edited excerpts.
Inc42: Tell us about the investment thesis of Green Frontier Capital.
Sandiip Bhammer: We are raising an INR 1,500 Cr ($177 Mn) fund and plan to make 15 investments, averaging $10 Mn per company. The fund will invest in pre-seed to Series A rounds, but we will provide follow-on funding for portfolio companies as they grow beyond Series A. Investment sizes will vary depending on the stage. It could be $500K for pre-seed, $1 Mn for the seed round, $1.5 Mn for pre-Series A and $2-3 Mn for Series A.
Our investment thesis revolves around ‘three Ds’ – digitisation, disruption and decarbonisation. Digital technologies are the cornerstone of our strategy as digital-first businesses often require less capital upfront and can be scaled rapidly. The second D, or disruption, refers to businesses challenging existing technologies [and incumbents] in terms of cost and effectiveness. Many of these startups are working on replacing fossil fuel applications. Finally, the businesses we invest in must have a measurable impact on decarbonisation.
We received SEBI approval as Category II AIF nearly three years after applying. This will allow our Indian investors to leverage our experience, track record and the robust pipeline of opportunities we have built in India.
Inc42: Why do you think it is an ideal time to invest in climate tech?
Sandiip Bhammer: As early movers in the climate tech space, we have become a go-to source for validation among startups. When generalist VCs flooded this sector a few years ago, we took a step back to avoid overpaying in an overheated market. With many of those investors shifting their attention to the newfound GenAI boom, climate tech companies are returning to us. This renewed focus has strengthened the pipeline for our AIF and gained support from the US-based limited partners. Meanwhile, our team in India remains a vital asset, positioning us well for the journey ahead.
Inc42: What about India’s climate tech ecosystem? How do you see it evolve?
Sandiip Bhammer: As the world’s fastest-growing economy, India stands at a critical juncture in the climate narrative. Given its rapid economic expansion, there will be a significant rise in its greenhouse gas emissions. While China and the US remain the largest emitters today, India is on track to witness the fastest growth in emissions, although it will not surpass them in total global emissions. As the fastest-growing economy in the world, India’s emissions will rise alongside its economy. Currently a $4 Tn economy, India is projected to reach $16 Tn in the next 25 years, growing four times over.
Also, most climate tech innovations are happening across the Global North. But India runs on jugaad – quick and affordable solutions for diverse use cases instead of original, groundbreaking inventions. It partially stems from cultural resistance to failure, which is not well-accepted in India. Unlike in the US, where failure is seen as part of the innovation process that encourages disruptions, a founder who fails in India finds it difficult to raise funding.
Inc42: What unique opportunities do you see in India, given your experience as a cross-border climate tech VC?
Sandiip Bhammer: As a climate tech investor operating in the US and India, we have the advantage of looking at opportunities from two geographies, which gives us a broader perspective. The US plays a crucial role in capital mobilisation and shapes much of the global climate narrative. Without a U.S. presence, Indian VCs might struggle to tap into the capital available there for global climate investments. That’s why establishing a strong network in both countries is essential.
At Green Frontier Capital, we prioritised building our U.S. network before expanding to India. Also, our board includes globally recognised experts such as Soumitra Datta, dean of Oxford’s Said Business School; Hessa Bint Sultan Al-Jaber, Qatar’s former minister of information and communication technology; Nishith Desai, founder of the global law firm Nishith Desai Associates; and Roy Salamé, former managing director and head of the Global Investment Opportunities (GIO) Group at J.P. Morgan Private Bank. These distinguished advisors closely work with us and our portfolio companies, providing invaluable insights and support.
Again, partnering with a climate-focussed VC is key for companies seeking validation for their sustainable approach. Generalist VCs often lack the technical expertise to guide startups effectively in this space. A case in point is RAS Luxury Oils, an Indian beauty brand committed to eco-friendly solutions. It came to us for product and process validation, and our endorsement opened the door for other climate investors. Our expertise and stamp of credibility firmly position our portfolio companies in the market.
Inc42: What are your focus areas within the broader climate space? What kind of businesses are you exploring?
Sandiip Bhammer: I won’t discuss specific startups we are targeting, as that is part of our competitive edge, and I don’t want to disclose it. However, I can give you an overview of our existing investments and future focus.
In the past, we invested heavily in electric mobility across the spectrum, including battery swapping, charging infrastructure, battery chemistry, EV ride-hailing and manufacturing for two-wheelers and three-wheelers. The EV ecosystem is so vast that it can warrant a dedicated fund to explore all its subsectors. Besides mobility, we invested in food tech, agritech and consumer lifestyle innovations.
In the future, we want to focus on renewable energy, especially rooftop solar. We are also looking at plastic circularity, having identified a promising company developing an eco-friendly alternative to single-use plastic. Additionally, we are evaluating investments in waste-to-energy technologies and battery recycling, both critical for a sustainable future.
Inc42: What about due diligence when you evaluate startups and their projections?
Sandiip Bhammer: At the stage we invest in startups, fully validating projections is nearly impossible since many of these markets are emerging for the first time. Consider our investment in BatterySmart. The battery-swapping model was not initially proven, but it surpassed expectations.
Our due diligence is more about spending time with the founder/s, understanding their commitment and assessing their willingness to work hard and make sacrifices. It is also about evaluating what they aim to disrupt and the scale of that disruption.
We typically invest in businesses that disrupt fossil fuel technologies in terms of pricing and performance. In climate tech, price reduction alone isn’t enough; the product has to match or preferably exceed the performance of existing options, particularly in a market like India, where adoption hinges on value. To ensure this alignment, we rely on people with deep expertise who can thoroughly assess these companies and confirm their dedication to climate goals.
Inc42: What key metrics do you focus on to assess a startup’s performance after investing in it?
Sandiip Bhammer: We closely monitor the outcomes reported by our portfolio companies to measure their climate impact. You will find their reported impact if you visit our website and explore any company we have invested in. Take BluSmart, for example, a zero-emission ride-hailing service. It has reported preventing more than 58,267 tonnes of carbon dioxide generation, equivalent to the annual absorption capacity of 2.2 Mn+ fully grown trees.
We review these metrics monthly, and no other VC in India’s climate tech space offers this level of transparency. This data is not for our limited partners alone. These insights are publicly available on our website. When there are significant changes in these metrics, whether positive or negative, we engage with the company to understand what has triggered the change. If the impact has declined, we explore potential issues and work collaboratively to address those.
As climate tech investors, we are not just vocal about creating impact; we rigorously measure it and hold our portfolio companies accountable. Any noticeable fluctuation in impact metrics triggers a deep conversation to ensure we stay aligned with our environmental goals.
Inc42: So, when does revenue kick in as a performance metric?
Sandiip Bhammer: Revenue is undoubtedly a critical metric. But if we only look at financial metrics like revenue, EBITDA or profitability, we may miss the bigger picture. In the startup ecosystem, [positive] EBITDA and net profit typically don’t materialise until the venture scales significantly, which often takes five to seven years.
By that time, startups begin to generate higher revenues while keeping expenses, especially fixed costs, under control. When fixed costs remain stable and revenue growth accelerates, EBITDA and net profits will start improving.
While we monitor revenues closely, our portfolio companies are often growing from a very low base. Hence, their revenue growth may appear exceptionally strong, reflecting the steep trajectories of early stage growth.
Inc42: What’s the limited partners’ take on this approach?
Sandiip Bhammer: There is growing excitement among investors. People are more interested than ever to invest in areas that not only offer financial returns but also allow them to feel that they are making a positive impact on the planet. For many LPs, making a profit while protecting the environment has become just as important, if not more, than simply generating profits.
Inc42: Where do VCs in India fall short?
Sandiip Bhammer: Many of them come from the software background or management consulting or startups. But they often lack experience in public markets and managing exits. The success parameter in venture capital is distribution of paid-in capital, or DPI, which reflects the cash-on-cash returns from exits. Unfortunately, most VCs in India have not demonstrated a strong record of meaningful exits.
We have positioned ourselves differently by generating sound exits for our investors. The exit from BatterySmart is one such example. It delivered an 18x exit multiple in three years, de-risking our investors’ capital and allowing us to give them early returns. The outcome gave them the confidence to make bigger bets on extraordinary companies.
Inc42: What is your key learning as a climate tech VC operating in India?
Sandiip Bhammer: Quite a few nuggets, I would say. A critical lesson is understanding India’s unique approach when it comes to fundamental, high-risk innovation. This country thrives on price-led and use case-driven solutions. Essentially, it tries to gain market share based on the price advantage and tweaks and scales existing products or technologies to solve problems.
I think the fundamental breakthroughs in climate technology are more likely to come from the Global North. In contrast, India’s strength lies in tailoring these advancements to its needs and scaling them efficiently. Basically, India is a ‘scale’ market and the focus here is adapting and applying proven innovations rather than developing them from scratch.
Now, let’s look at emissions. Around 45-50% of emissions in India stem from transportation, food production and consumption, and waste management. These areas are our primary focus, and within them, we see immense potential in sectors like EVs and their ecosystems, food and agritech, plastic circularity and sustainable waste management. Scalability in these areas will heavily depend on technology, with disruption and digitisation serving as two critical pillars of our investment strategy. No serious investor in India’s climate space can disregard these pillars.
The government, too, is pushing this transition so that India emerges as the largest and fastest-growing green economy. Both central and state governments foster this vision and provide a robust policy framework to support climate investments.
What matters most at this point is India’s vast potential to grow as a green economy. Take EVs, for instance. Despite strong unit economics and product-market fit, less than 3% of vehicles on the road, particularly two-wheelers and three-wheelers, have been converted to EVs. This indicates a massive growth opportunity.
Inc42: What will be the funding trends in climate tech as we move into 2025?
Sandiip Bhammer: Well, the startup ecosystem is getting back on its feet after two years of funding constraints. This pause happened because many technologies took a long time to show returns, and it frustrated investors. In India, these challenges are compounded as implementing Central policies across states faces roadblocks due to different priorities [political or otherwise]. But a greater alignment between the states and the central leadership now ensures smoother execution, signalling a positive shift.
Globally, thighs are also looking up. Now that the uncertainties over the U.S. Presidential polls are over, we may see lower interest rates, potentially boosting investments in long-term assets like venture capital. Besides, businesses prioritising climate protection are gaining momentum as people realise the urgency to combat the climate crisis.
However, we must do something quickly. Without decisive action, we risk losing some of the most beloved destinations. Iconic places like the Maldives, the Seychelles and many other low-lying countries will cease to exist in the next 30 years if we don’t immediately address global warming and rising sea levels. And we are already VERY late.
Funding climate initiatives is a step in the right direction. Climate-focussed funds serve as strategic filters, channelling capital towards the most promising technologies that deliver maximum impact within the shortest timeframe.
Inc42: What is your advice for Indian startups specialising in climate tech?
Sandiip Bhammer: Follow your passion and don’t be afraid to fail. Focus on India and the global South, where you will find the biggest growth opportunities. As these regions are among the largest emitters of greenhouse gases, there’s always a chance to make a real impact. Finally, don’t forget to use technology to your advantage to scale your business as fast as possible.
