Nature Fix Climate (NFC) Ventures, a climate technology-focused fund launched by Harsha Moily (son of senior Congress leader M Veerappa Moily) and Balaji Srinivas, former Abraaj Group managing director, aims to hit the first close of its $200 million fund by the first quarter of 2022.
The fund, which was first announced in July this year, has received in-principle commitment of upto $85 million from five anchor investors, Moily told Moneycontrol.
While he didn't disclose the names of these investors since the fund is yet to close, Moily said these investors include high net worth individuals (HNIs), Environmental, Social, and Governance (ESG) division of a large Wall Street firm, corporate venture capital arm of a large global agriculture firm, a hedge fund and an institution that invests in climate-tech venture capital firms and think tanks.
The climate-tech fund plans to focus on four verticals - green buildings, energy storage, sustainable agriculture, and alternative energy. It will invest in startups in India and Israel.
"Most of our investments will go into India and a partial investment would go into Israel. We are looking at Israel more as a center for technology transfer into India. We also plan to invest in Israel-based startups who are eyeing an India foray" Moily said.
The fund is currently building a team in both the countries and are scouting for operating partners "We have shortlisted a couple of general partners in Israel, who could also double up as an operating partner" he said.
Moily had earlier founded a rural supply chain solutions firm Moksha Yug Access in 2006 and exited the business in 2015.
Nascent market but huge growth potential in 5-10 years
Srinivas said that climate-tech is currently in a very nascent stage in India from an investment standpoint and there are no dedicated funds that are focusing on climate tech solutions in the country at present.
"I think in the next 5-10 years, we will see a lot of action, both from a funding perspective and also from an entrepreneurial perspective on a lot of companies gearing themselves towards climate friendly solutions" Srinivas said.
"We've clearly made strides in solar and wind not only in India but globally. Today, we are seeing the third leg of it where we are trying to convert mobility into electric, starting with commercial vehicles and scooters and moving to other mobility based vehicles" Srinivas said.
In five years, Srinivas said a lot of industries would want to show some of their commitments towards climate friendly solutions either voluntarily or through legislation and they would hope to capture the opportunities that will arise out of it through this fund.
Unlike a typical venture capital firm, NFC Ventures is also taking a unique approach by factoring in the reduction of carbon emissions through its portfolio companies in its overall returns to investors.
"The way we have positioned our fund to our LPs (limited partners) and sponsors is two-fold. One is quantified by IRR (Internal Rate of Return), which all funds do. We would also like to take a target on how much carbon emissions we have actually avoided or reduced through our portfolio companies, which would be quantified in each of our investments. So when we exit some of these investments, we will also try and see how much we have actually achieved against that target" Srinivas said.
The fund will look to invest $5 million - $15 million in startups, primarily in the above mentioned four sectors, however Moily said their "potential portfolio companies need to have a very strong decarbonisation story"
He also said they will work with their portfolio companies to ensure the cost premium of going green is as little as possible to accelerate customer adoption for these green products and services.
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