Mumbai-based Avaana Capital is an early-stage venture capital firm that supports tech-led innovation for catalysing climate action and sustainability, while also creating commercial returns. Avaana recently announced its Climate and Sustainability Fund, that would invest across food and consumption, mobility and supply chains, resource management and financing and digital enablers. Its portfolio includes Coverfox, Farmart, eekifoods, Eggoz, Terra.do, to name a few. “Addressing climate change would need massive innovation in re-design and re-engineering across all segments of the economy to ensure we are not trading off people, planet and profits. We expect several large companies to emerge in line with this theme,” says Shruti Srivastava, principal – Avaana Capital, in a recent interview with Sudhir Chowdhary. Excerpts:
What is Avaana Capital’s investment thesis and strategy?
We invest in early-stage startups that are using tech-led innovation to catalyse climate action and sustainability, while generating outsized commercial returns. The last decade has seen increased awareness regarding climate change, and the need for mitigation, adaptation and resilience. Businesses are recognising climate change for the economic risk it brings, with several large businesses having announced net zero targets. Consumer awareness has also increased, driving changes in preferences and behaviour. We believe that climate action and sustainability will be for the next 20 years, what digitalisation was for the last 20 and we shall see large transformative companies being created in this space.
How does Avaana Capital go about identifying startups it would like to invest in?
We aim to invest in startups that have the potential to become market leaders. We look at the market opportunity size as well as depth of pain point being solved, along with the potential to scale with attractive unit economics. We like founding teams that match bold vision with strong understanding of execution and a learning mindset.
What are the key focus sectors of the fund and why did Avaana choose them?
The fund focuses on investments in climate action and sustainability. Sectors of interest within climate and sustainability would include food and consumption, mobility and supply chains, and resource management. These sectors are major contributors to GHG (green house gas) emissions and offer significant opportunities for building solutions to enable transition towards sustainability. Additionally, we also look at financing and digitalisation as enablers for sustainability.
How do you foresee the sustainability and climate change sectors evolving in India?
We are seeing ESG (Environmental, Social, and Governance) and sustainability move from being compliance checklist items for companies to becoming an integral part of corporate strategy. Businesses are also recognising the economic risks that climate change brings and we are seeing this recognition in Indian corporations as well, with eight out of 10 of the largest public companies announcing net zero targets.
The government is also making appropriate policy structures to enable transition to net zero, as seen in our recent Union Budget. Consumer preferences are also shifting in line with increased awareness. These forces together will drive significant shifts across sectors—energy, food, consumption, logistics, infrastructure. Climate and sustainability will become embedded in various elements of business, not very different from how digitisation is weaved into all major aspects of the economy today.
What role does Avaana Capital play in the growth journey of its portfolio companies?
We work closely with our founders to help accelerate market leadership and see ourselves as partners in that journey. We help with revenue acceleration by opening doors to growth opportunities—through industry outreach and strategic partnerships. We leverage our proprietary networks to help bring on board the best talent. We also help with scale-up support in building systems and processes for scale.