A new dawn for start-ups in India may impact us all
Already in the opening remarks of the Climate Solver event in India Ravi Singh (Secretary General & CEO, WWF- India) highlighted that India has one of the biggest small and medium sized enterprise sectors in the world and their potential is now being looked at in a major way. There is a big impact potential in this, if that effort is also canalized towards achieving societal goals.
Presentations and discussions over the day revealed undoubtedly that there has been an overall positive change and mind-shift in the Indian government attitude in India towards the promotion of start-ups. It is clear from the launch of “Start-Up India” that the needs of start-ups now have a fora where they are put central stage. Prime Minister Modi’s visit with Indian start-ups, incl Climate Solver honored entrepreneur GIBSS — Green India Building Systems and Services, to pitch in Silicon Valley last year has also changed the dynamic around start-ups in India today. And this may have big effects not only in India but also to the world outside.
This was reinforced in real cases during the event with comments from for example Mudit Narain that introduced Bharat Innovations a new $150 million start-up fund that will partly invest in scaling cleantech innovation in close collaboration with incubators such as the Centre for Innovation, Incubation and Entrepreneurship at IIM Ahmedabad. This represents six times more funding for sustainable ventures if you compare to the previously available funds from Infuse Ventures. We also heard Piyush Mathur, CFO for Climate Solver Simpa Network, witness that they were inspired by Make in India to manufacture their solar energy access products locally. Present from the Climate Solver India jury were Mr. Nitin Desai (Former Under Secretary General for Economic and Social Affairs, UN), Mr V. Subramanian (Former Secretary, MNRE), Mr Krishan Dhawan (CEO, Shakti Sustainable Energy Foundation) and Dr Arunabha Ghosh (CEO, CEEW). The jury raised that it is important to celebrate the fact that innovation is key to us in order to reach the agreed sustainable development goals but having an ecosystem that takes these innovations to scale is more important. And do we really have that? That is the real issue.
The jury raised that the technologies and business models winning awards such as Climate Solvers may not be glamorous but have actually developed something that is making a difference. And indeed two Climate Solver entrepreneurs from last year were present to report back on their journey. Simpa started operations in 2011 and, reached over 10,000 customers in the state of Uttar Pradesh alone last year and now witnessed how their customer base has tripled over the last year partly thanks to being honored as Climate Solver. Mr. Mainak Chakraborty, Founder-Director of GPS Renewables highlighted that Credibilility and Visibility are very important for start-ups that do not hold the budgets of larger corporations. Therefore, the recognition from Climate Solver has already meant a great deal to their expansion to reach 35 projects, all remotely controlled from Delhi, and the 30 000 tonnes of GHG emissions avoided today as well as their recent expansion to the US market through a California pilot. So we witness some growth from credibility and visibility but there was rightly a call from Dr Arunabha Ghosh for a lot more private equity as well as debt finance, such as green bonds, to reach these kinds of Climate Solver innovations rather than more business as usual technologies. We need to go from case studies at scale to implementation at scale. There was also a jury request to WWF to assess how the WWF Climate Solver portfolio of now more than 80 entrepreneurs have developed after they have been honured. A request we have also heard from other countries and will do as part of the work going forward.
The stars of the day were our newest additions of two innovations the jury selected this year as really walking the talk on climate innovation in India. They are:
- Radiant cooling solution for building sector by Oorja Energy Engineering Services
- Prepaid DC micro grid with USB stick based recharge by Boond Engineering & Development
The expert panel on strengthening the Indian Climate Innovation Ecosystem were Dr. Nakul Gupta (Assistant Professor and Coordinator, Entrepreneurship and Incubation Centre, MDI, Gurgaon) Mr. Pankaj Sindwani (Vice President, Tata Cleantech Capital) Mr. Pradeep Sharma (AGM, Consultancy Services Cell, SBI) and previously mentioned Mr. Mudit Narain (Vice President, CIIE, IIM Ahmedabad and Bharat Fund) and Mr. Piyush Mathur (CFO, Simpa Network) with undersigned as moderator.
In the panel there were expressed wishes and ideas to for ex
- Initiate a dialogue between innovation companies and financial institutions in India as well as speeding up cross-border migration of the large range of innovations outside, eg as annually portrayed in Climate Solver, Sustainia 100 and other sustainable innovation initiatives. The challenge is partly linguistic where companies need to take time to develop financial literacy, and banks on the other hand should make efforts to understand the technical and commercial aspects. For banks financing is not a problem but it is important for business to have scale and right kind of business models for banks to have an incentive to lend
- Get debt finance institutions (for ex bond issuers) more actively looking at new technologies which could make a big difference in sustainability impact, not least decentralised energy access projects.
- Engage mainstream lending institutions in India to better understand the businesses where there is a risk of distributed customers/cash flows.
- Devote more time to new ideas by mainstream lending institutions
- Change behaviour in the way we see business. The next wave of innovations (after the IT revolution) is in sectors such as cleantech and healthcare.
- Use ‘Growth hacking’ as a process of rapid experimentation across marketing channels and product development to identify the most effective, efficient ways to grow a business. It’s working in the ICT sector so is it applicable to climate innovation too?
From the entrepreneur side an obstacle was raised that there is a ‘dark middle’ of raising capital between 5 and 15 million US dollars where entrepreneurs have nowhere to turn. So the journey for the best innovation companies to raise capital in different stages of equity and debt finance in order to employ people, reduce emissions and draw people out of poverty continues in India, as it does elsewhere. Pankaj Sindwani from Tata Capital drew a comparison to mature cleantech by reminding us all that a few years ago no capital wanted to touch solar PV but now everyone’s there and wants to be there due to the scale of it. Looking forward we must open up many more such innovation opportunities also beyond solar PV and wind power.
There is a new dawn for start-ups in India supported by Government as well as the private sector. There are still problems to be resolved but there are also tremendous opportunities when actors like incubation centres, entrepreneurs, public/private finance and NGOs, that were respresented in our panel, start to pull in the same direction on climate innovation and mind the gaps that stop many innovations from growing large at speed today. Initiatives like Start-Up India putting the entrepreneurial challenges at the core is taking this a step in the right direction and with appropriate integration of sustainability this is not only good news for India, but also for the world outside this brewing innovation economy. And there is growing confidence from these actors in India that the ecosystem of innovation is coming into place and that it’s a good place to be for entrepreneurs looking for growth opportunities at this very moment. Increasing the flow of start-ups from as well as to India thereby carries hope for large markets, rapid business growth as well as carbon reductions and energy access at scale in the years to come.
And thanks to new funding the reach of the Climate Solver programme in India is now being expanded to different regions of the country to capture larger number of local initiatives and entrepreneurs as well as to strengthen the interface and networking amongst different stakeholders.
For further reading please find the press release here
Mr. Stefan Henningsson, Senior Adviser Climate Innovation, WWF Climate & Energy Practice