**Investing in India’s Advanced Manufacturing: Accel’s New Focus**
Accel’s investment strategies in India, particularly in climate tech, sustainability, agritech, and electric vehicles, have not yielded the expected results. However, the venture capital firm is pivoting towards what it terms “advanced manufacturing,” planning to make substantial investments from its latest $650 million fund. Prashanth Prakash, a partner at Accel, expressed his views on the underperformance of climate tech in India and other countries, stating, “I don’t think climate tech has close to lived up to its potential.”
In the agritech sector, Accel’s backing of AgroStar stands out as a promising investment. The firm led a $6.7 million funding round in April for the Pune-based startup, which provides seeds and farming advice to farmers. Regarding the consumption sector, Prakash remains optimistic but emphasizes the need for innovation. He noted that both venture capitalists and startups must explore “new paradigms” instead of replicating existing models like Swiggy or Flipkart. “We believe that the current platforms are very powerful, but it’s about finding new pockets of consumption beyond the top 100 cities,” he added.
Accel’s investments in the consumption sector include a $10 million Series A investment in Bengaluru-based grocery chain Apna Mart in 2023 and an $11 million Series A round for e-commerce platform CityMall in 2021. While climate tech and agritech have not met expectations, Accel believes Indian startups will play a significant role in the global energy transition. Prakash highlighted the importance of hardware and components, mentioning the need for innovations like rare earth-free motors.
Accel has also invested in electric vehicle components, although these investments remain undisclosed. The firm is particularly interested in sectors where creating intellectual property (IP) is essential, believing that India has the potential to excel in these areas.
The renewed focus on manufacturing comes at a time when geopolitical shifts are prompting companies worldwide to seek alternatives to China. India is positioning itself as a viable option for these needs. Accel defines advanced manufacturing as a space where startups develop capabilities from an IP and engineering-first perspective. “Startups in this space leverage innovation across a few dimensions,” Prakash explained, indicating a diverse approach to innovation.
In summary, while some of Accel’s initial investment theses in India have not materialized as expected, the firm is strategically shifting its focus to advanced manufacturing, anticipating significant opportunities in this evolving landscape.
**FAQ**
**What is Accel’s new focus in India?**
Accel is shifting its investment focus towards advanced manufacturing, aiming to leverage innovation and intellectual property in this sector.
