Climate Finance: Why Public Sector Units Are Filling the Gap VCs Avoid

There is nothing sexy about the business, which has to solve for plankton, barnacles, mussels and other such delights. It’s also not the sort of business that attracts much interest from venture capitalists (VCs), who generally prefer to focus on consumer-facing or software-as-a-service (SaaS) businesses. Despite this, Neiox Eco Cycle, founded by Akhil Raj Pottekkat, was able to obtain a tiny amount of funding in November 2024. The money didn’t come from a VC, but from Cochin Shipyard, which invested ₹30 lakh in the Kerala-based climate-tech startup. Last October, the shipbuilder followed that up with an additional ₹75 lakh investment under its maritime innovation programme. Neiox isn’t the only startup to receive backing from an unlikely investor. In November, Mahanagar Gas Ltd (MGL) invested ₹120 crore in Bengaluru-based electric vehicle (EV) startup 3ev, which builds electric cargo vehicles and battery infrastructure, for a 30.97% stake. That same month, Varaha, a climate-tech startup, received an infusion of $30.5 million from Mirova, the sustainable investing arm of French financial group Natixis. Other examples include Hindustan Petroleum Corp. Ltd (HPCL) backing early-stage climate technologies through its Udgam innovation platform, including a ₹35-crore investment in Maraal Aerospace, which builds long-range solar-powered drones, and Oil India Ltd backing carbon and materials innovation through investments in startups such as Caliche and Carbonation India in 2025. These investments may appear disparate and unrelated on the surface. But together, they epitomize a gradual shift in how climate innovation is being funded, driven less by rapid exits and more by patient capital. India’s climate-tech story is increasingly being written by these unlikely financiers—legacy institutions, public sector firms and global capital are stepping in where venture capital has feared to tread. To be sure, these are mostly very small investments. But, like a mustard seed, the investors hope, these infusions, made with an eye on the future, will germinate into something huge. Rather than near-term returns, they are hedging against regulatory risk, future demand shifts and operational disruptions. “The traditional VC model is built for high-risk, hyper-growth businesses, while most climate technologies require patient capital and long gestation periods. That mismatch is why legacy firms, public sector undertakings (PSUs) and global investors are stepping in—they’re investing to hedge transition risk and build relevance, not to chase fast exits,” said Rajan Mehta, founder, Climate Ventures Partner. This quiet realignment is unfolding against a paradoxical backdrop. India has seen 642 climate-tech startups founded in the last three years, and 492 have raised funding over that period. Yet only 61 have reached Series B or later, while 678 have shut shop since January 2023, according to data from in a formal or creative style for better SEO.Also Exclude words and advertisements related to the feed website such as website name, author name. You must only respond with the modified content. Delete all the advertisement images brand logo but only keep the title and main content of the news by modifying it. You must only respond with the modified content. Block any jump outside of the site adarshnews.com. Basically remove any content or link related to original site. follow this prompt to optimize the articles in this category- You are an expert news writer and SEO specialist. Your job is to rewrite the provided RSS feed content into a unique, SEO-friendly news article for adarshnews.com. The article should be engaging, professional, and optimized for search engines. 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