The exorbitant fuel prices and rising environmental and climate concerns are focusing minds on EV startups like never before. Robust investments are made in the transition towards sustainability to make it more sufficient in meeting rising demands for energy services. India’s commitment to clean energy seems quite evident as it has witnessed one of the fastest growth rates in renewables of all the major economies. In addition, it has set an ambitious target to deploy 450 gigawatts of renewable energy by 2030. Over the last decade, the amount of solar capacity installed on the grid has increased by 3,000 megawatts in 2009 to 36,000 megawatts in 2020.
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Despite the pandemic-led dip in investment, the year 2020 presented many high points for the sector, led by companies offering phased enhancements to clean technologies in areas – grid management and electric vehicle charging. To help EV startups achieve great strides, Green Frontier Capital - India's first investment firm focuses on growth companies that are delivering breakthrough innovation in green industries.
The investment model
GFC typically invests between 1.5 million to 2 million in each of the first investments and participates in future rounds on a pro-rata basis. It invests in India-centric green companies with disruptive digital business models and highly attractive cash flow with net 20-25% USD Equity IRRs or 5-10X MOIC. In addition, it also considers the key factor of measurable decarbonization and SDG impact before making an investment.
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To upgrade the nation’s green ecosystem holistically, the green investment firm emphasized on EV startups, aligned with its investment themes – decarbonization, embedded AI-based big data and deep learning algorithms, digitization, and Biological Intelligence. Apart from sustainability, GFC-funded purpose-driven EV startups with having a greater impact on the environment and are on the trajectory of better scalability and profitability including BatterySmart Swap Stations, BluSmart Mobility, EMotorad, and Revfin Services.
“GFC backs young and dynamic entrepreneurs in EV space that are engaged in breakthrough innovation for scaling clean, affordable mobility globally but, more specifically in emerging markets such as India where the largest gains from climate action will come over the next 10 years,” said Sandiip Bhammer, Co-founder & managing director, Green Frontier Capital
Digital by design, the portfolio companies deliver the highest possible returns to shareholders while meeting all ESG criteria and delivering game-changing results to combat climate change.
Breakthrough in EV space
GFC understands India’s environmental scenario that e2-wheelers and e3-wheelers will play a crucial role in driving India’s EV revolution. Considering PM Modi’s target of EVs making up 30% of all new vehicle sales by 2030, GFC has invested in EMotorad – one of the fastest-growing electric vehicle companies that are well-positioned to take advantage of the massive market opportunity.
Commenting on its recent investment in an EV bike startup – Emotorad, Sandiip Bhammer, Co-founder & managing director of GFC said, “As Climate Investors, we deeply care about the planet. There is little debate that one of the biggest contributors to CO2 emissions in India is the transportation sector and driving heavy vehicles and cars, in turn, is a big part of that issue. If India has to limit its impact on climate change, we will have to drive less. And the best alternative to driving is riding two-wheelers and, more specifically, e2-wheelers.”
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Not everyone in India can afford expensive 2-wheelers and keeping that view in consideration, E-bikes can offer an effective solution to overall air pollution (470 kgs. of CO2 per 1,000 miles for a car vs. 20 kgs for a two-wheeler, and even lower for an e-bike). Furthermore, various states in India have already begun offering rebates to help their residents buy e-bikes. The switch to e-bikes proves to be cheaper and faster to implement and requires fewer resources for manufacturing and charging than electric cars/2-wheelers need.
Future plans
GFC is continuing to scale its investments in the EV ecosystem in India including but not limited to charging infrastructure, battery management systems, rare earth metal extraction businesses, component manufacturers, etc. It aggressively plans to multifold EV adoption and EV startups’ growth. The number of investments will be based on a case-by-case approach and will depend upon a host of factors, the most important of which is the sustainability front, how compelling the investment proposition is and how it will complement our overall portfolio.
