Indian Green-tech Start-ups Need Capital

Indian Green-tech Start-ups Need Capital

M R Rangaswami, co-founder of Sand Hill Group was one of the senior organizers at the recent annual Nasscom Product Council conference in Bengaluru. Apart from mentoring and funding several tech start-ups, he runs a vibrant forum called the Corporate Eco Forum in the United States (corporateecoforum.com). It is dedicated to improving the effectiveness of eco-strategies at Global 500 companies Its annual sustainability award for corporates is much sought after by CEOs.

Excerpts of his chat with Benedict Paramanand, Editor of SustainabilityNext on the sidelines of the NPC conference

Challenge for Green startups

Unfortunately, the sustainability of green tech and clean-tech companies seems to boil down to cost of oil. Since the oil crash three years ago, funding to these companies has disappeared. Many start-ups have gone out of business. The way they have to get back is reformulate their strategies and base their assumptions on $40 or $50 dollar a barrel.

Scaling issues for clean-tech

It’s relatively easer for tech companies to scale but is very hard for green-tech or a clean-tech company.  A tech company needs around $ 250 million dollars or so while the other two need at least a billion dollar to scale. Also, founders can give up, say 30% stake in a tech company to fund growth, while that percentage is as high as 90% for green-tech and clean-tech companies if they want to take them to to profitability. So, the economics are different and challenging.

Give me a sense of Indian start-ups scene in the green space

They are few and far between. Most are still bootstrapping. They essentially lack sufficient funding. I know of a Rs. 50 crore organic juice company, if the founder had sufficient funding he could easily be a Rs. 500 crore company today. I see slow growth because of lack of access to capital. The whole sector is somewhat rudderless.

We hope COP21 (Paris Climate Agreement December 2015) would put fire into this sector and the government steps up its act big time.

Future drivers

Most of the time we react only when crisis is today! No one is planning 20 years ahead. We are now forced to do so since the crisis is at our doorstep.

The Indian government is making the right noises about COP 21. The key is to ensure that that several of the protocols are in the implementation stage in the next two years and we are not just talking.

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