Indian startups in circular economy attracted $1.8B investments in five years: Kalaari report

The circular economy in India has attracted investments totalling $1.8 billion over the past five years between 2016-2021, said a report released by early-stage venture capital firm, Kalaari Capital. 

Circular economy advocates reuse of resources, products, and materials, and promotes recycling, refurbishment, and sustainable practices. 

The report added that nearly 60 percent of deal volume addressed mitigation-oriented innovations in the energy and transportation sectors. These sectors also made up for nearly 80 percent of the deal value, most notable being the $200 million fundraise by Ola Electric, the electric vehicle arm of mobility company Ola. The deal announced in January 2022, valued Ola Electric at $5 billion in a round led by Tekne Private Ventures, Alpine opportunity Fund, Edelweiss, and others. 

The report said that by 2030, if India can capture just one percent of the market opportunity in a circular economy, it would account for nearly $4.5 billion opportunity. The report added that Indian companies will have to crack cost, convenience and consciousness to use products which contribute to the circular economy. 

“India’s leadership in technology and innovation creates an opportunity to accelerate its transition towards the Circular Economy, especially in light of greater cultural acceptance towards circular practices,” said the report.

The report said India can leverage circular economy principles and innovation across key sectors such as cutting down waste generated from the fashion industry, efficiency in agriculture and cutting down food wastage, adoption of electric vehicles and use of multimodal transportation in mobility, reducing carbon emission in construction and finding replacements for rare earth minerals.

The report highlighted five consumer-focused business models based on the principles of circular economy. The models include circular supply chain, recovery and recycling, product life extension, sharing as a service and product as a service. 

“We at Kalaari Capital are looking to back innovative and patient founders who are passionate about sustainability. Entrepreneurs who have the vision to change how we think about our footprints and have the gumption to champion breakthrough circular innovations,” said the report.