Despite the fall in cheque sizes, investors said interest has shifted to newer sub-categories. The deal volumes have remained in the 70-75 range, with seed-stage activity at 33 rounds.
Venture funds told ET that instead of focussing on EV mobility, which has already seen substantial private investment, focus is shifting towards export-ready categories such as MRV (measurement, reporting, and verification), carbon-credit platforms, circular economy solutions, climate SaaS, and digital infrastructure.
ETtechThese sectors have potential clients in the US and the European markets, where margins are better and the ability to pay higher. Climate-tech startups such as Takachar, Lohum, and BioPrime are some examples from this space.
“The broad climate-tech numbers can be misleading unless you break them down. There are many emerging areas such as direct air capture, MRV software, and climate monitoring platforms. This market will mature,” said Alok Chauhan, who leads clean mobility investments for Axilor’s Micelio Fund.
He added that multinational companies are pursuing aggressive decarbonisation and ESG goals, driving early demand. “These companies tend to adopt faster, pay better, and have clearer mandates than many Indian buyers,” Chauhan said.
UK-India cross-border fund Pontaq Venture’s founder Prem Barthasarathy, who is closing a Rs 700-crore India-focussed deeptech fund, said climate-tech startups must be able to demonstrate financial viability from the start for higher VC interest.
Carbon deals: A bright spot
The carbon category has emerged as one of the few bright spots, with funding scaling to $73 million in 2025 YTD from $23 million in 2024.
Gurugram-based startup Varaha, which helps small farmers remove greenhouse gases from the atmosphere, raised $30 million from Mirova in November this year. The 2022-founded startup operates regenerative agriculture and MRV-led projects across south Asia. Most of its carbon-credit buyers are based overseas.
“We expect domestic demand to pick up in 2026, once industries such as cement, steel, and fertilisers face mandated (emission) reduction targets,” said cofounder Madhur Jain. Varaha reported over $5 million in revenue in FY24-25 and was profitable, Jain said.
Another startup focussed on carbon removal, Alt Carbon, secured $12 million in seed funding in May 2025. The round was led by Physical Intelligence founder Lachy Groom, with participation from Shastra VC and several angel investors, aiming to scale the company’s Enhanced Rock Weathering (ERW) projects in south Asia to remove CO2 from the atmosphere.
BYT Capital founder Amit Chand, who is scouting for investment opportunities in climate-tech startups, said that as Europe and the US target net-zero by 2050, and India’s target remains 2070, a natural export window has been created. He expects founders to increasingly build around green energy and storage, circular economy models, and climate-resilient agriculture as large conglomerates look for compliance-ready solutions.
The largest and the most popular climate-tech category, EVs, saw funding fall from $1.07 billion in 2024 to $512 million in 2025 YTD. Deal volumes also slowed from 55 to 42.
“EVs are a double whammy because startups must convince investors and also compete with very large incumbents,” said Amitabh Saran, founder of Reliance-backed Altigreen, which is in the process of closing its series B round. He added that investor interest is gradually expanding beyond vehicles to components such as battery systems, chargers, and motors.
This year also saw one of India’s largest two-wheeler EV makers, Ather Energy, going public. While the company had a lacklustre listing day gain, its share price is currently trading at Rs 678, up 111% from Rs 321, the higher end of its IPO price band.
