After a lull in funding activity, eco-friendly direct-to-consumer (D2C) brands are back in the spotlight, with investors loosening their purse strings. These startups, which peaked with $60 million in funding in 2022, are witnessing renewed traction, having raised $29.2 million so far this year. This marks a sharp rebound from just $0.59 million in 2024 and $17.6 million in 2023, according to data from Tracxn.
Last week, sustainability-focused homeware brand EcoSoul Home entered the soonicorn club with a $20 million funding round led by Accel and Bajaj Fin Securities, among others. Earlier this month, sustainable solutions startup Amwoodo secured $4 million in pre-Series A funding led by Rainmatter. In July, Bengaluru-based Bambrew raised $10.3 million in a strategic round for its eco-friendly packaging solutions, while home décor brand D’moksha, which had previously focused on overseas markets, began scaling operations in India.
“Favourable environmental regulations and plastic restrictions have also been encouraging investment. Eco-friendly D2C brands like ours are today able to demonstrate growth and sustainability simultaneously, thereby making them investor-suited,” Rahul Singh, co-founder and CEO of EcoSoul Home, told FE. The company has doubled its revenues in the past 12 months, expanded its portfolio to over 1,000 SKUs, and is currently present in 12 countries. Listed across e-commerce and quick commerce platforms, EcoSoul generates 68% of its revenues online. Singh added that the firm aims to double revenues, launch five new facilities, and expand capacity at existing plants in the coming year.
Key driver of investor interest
Industry watchers note that shifting consumer behaviour—particularly among millennials and Gen Z—is a key driver of investor interest. This demographic is actively seeking cleaner, toxin-free, biodegradable alternatives across daily essentials such as home and kitchen products, personal care, apparel, and beauty. Accessibility of price points and wide distribution have also been critical for customer retention.
“Repeat orders or brand loyalty emerge only when there is price consistency with conventional options. Brands that have cracked this pricing while building real, achievable distribution strategies are showing sustainable retention, so capital is following,” said Pankaj Makkar, managing director at Bertelsmann India Investments (BII). BII’s portfolio company Nat Habit, which offers eco-friendly personal care products, has scaled revenues from ₹80 crore in FY24 to ₹120 crore in FY25. The brand ships 1.5 million units a month across 200 SKUs, backed by investors including Fireside Ventures and Amazon India Fund.
“Investors are increasingly placing bets on D2C brands that can deliver authenticity, traceability, and scalable unit economics. ESG concerns, regulatory scrutiny, and shifting consumer preferences also contribute to this increasing investor interest,” said Swagatika Das, CEO and co-founder of Nat Habit. The company is targeting an ARR of ₹500 crore in the next 18 months, up from ₹200 crore currently, with offline, general trade, and quick commerce expected to contribute up to 20% of revenues.
Challenges persist
Despite the positive momentum, challenges persist. High R&D spends, regulatory compliance, ensuring product freshness, and scaling cost-efficiently amid rising input costs remain pressing concerns. Distribution adds further complexity. “Maintaining product freshness and managing supply chain complexity, especially as we expand offline, are key challenges. Cost efficiency is another as raw materials and logistics are getting pricier,” Das said.
Balancing growth with profitability has therefore become central to sustaining the trend. A report by IMARC Group estimated that India’s green technology and sustainability market reached $837.2 million in 2024 and is projected to grow to $8.6 billion by 2033, expanding at a CAGR of 27.36% between 2025 and 2033.