Mumbai-based Avaana Capital, a venture capital firm focused on climate solutions has announced the final close of its sustainability fund at $135 million. 

By raising $135 million, the VC firm also successfully surpassed its initial target of $125 million. 

Addressing Climate Change

Through this fund, Avaana Capital aims to support early-stage startups that develop innovative solutions to address climate change, according to a press statement. 

The VC firm will also use this fund to focus on specific sectors that could significantly reduce carbon emissions in India. 

Through this initiative, the Green Climate Fund, the largest climate-focused fund globally has also made its first investment in India. 

The funding was also backed by several major institutional investors including the U.S. International Development Finance Corporation, UK-India Development Cooperation Fund, The Self-Reliant India Fund, the Small Industries Development Bank of India, and Azim Premji Trust. 

"The Avaana Climate and Sustainability Fund will help build the next generation of climate-first companies to make meaningful progress toward a sustainable future," said Anjali Bansal, Partner at Avaana Capital. 

She added: "The support from leading global and domestic institutional investors underscores the importance of innovation in driving climate action and delivering long-term impact." 

India's Energy Transition Journey

This development comes at a time when India is spearheading its energy transition journey by reducing its dependence on crude oil and other traditional fuels. 

India has set its net-zero target by 2070, and the country has already initiated several renewable projects which includes, solar, wind, and green hydrogen. 

Kavita Sinha, Director at the Green Climate Fund's Division of Private Sector Facility said that this investment could boost the country's transition towards renewable energy, thus helping the nation achieve the net zero targets. 

"Avaana's focus on transformative technologies in critical sectors will provide climate-aligned solutions to people and support India's climate ambitions. This partnership will accelerate India's net-zero journey and create scalable models for other emerging markets facing similar challenges," said Sinha. 

Earlier this month, India's Central Electricity Authority revealed that the country's total renewable capacity crossed 200 gigawatts as of October 01, 2024. 

CEA added that India's renewable energy-based electricity generation capacity currently stands at 201.45GW, accounting for 46.3 percent of the nation's total installed capacity.