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Sunny side up for venture capital investors in India

According to reports, the sunny side is up for venture capital investments for the renewable energy sector in India.

According to Venture Intelligence, a research service focused on Private Equity & M&A, the share of VC funding in the country, going to the cleantech sector, has grown from less than 10 per cent in the early 2000s, to over 50 per cent in 2011.

Several of these are reaching out to VCs in the early stage for funding, experts say.

For instance, IDFC Private Equity invested Rs 80 crore in Green Infra, SBI Macquarie invested Rs 125 crore in Soham Renewable Energy and wind energy start-up, ReNew Wind Power, raised Rs 1,000 crore from Goldman Sachs.

“Private equity investments in renewable energy companies stood at $522 million across 14 transactions for the first three quarters of 2011,” according to a report on VCCircle.

However, an area of concern is that most start-ups are today focusing on innovation in technology rather than a business model, Mr Rama Bethmangalkar, Principal, VenturEast, told Business Line.

He attributed this to the fact that most entrepreneurs today are those with niche, technology backgrounds and said that the industry was still in infancy stages. “But eventually the issue has to be addressed,” he said.

Access to subsidies, for instance, is one such aspect that could be factored into the business model to make it easier for the end-user, Mr Bethmangalkar pointed out, considering the opportunities that offgrid solar options offer to Indian citizens and the Government grants available.

“If you set up a rooftop solar system, it is tedious to file an application to the nodal agency and go through the motions. What a company could do is to innovate and trap the incentives for the end user,” he said.

“We are looking for companies that can crack the business model innovation and also scale up fast,” he added.

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