ZeCa Capital’s ₹150 Cr Sustainability Fund Secures SEBI Approval

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Sustainability-focused venture capital firm ZeCa Capital has received the Securities and Exchange Board of India (SEBI) approval to launch its first fund, ZeCa Sustainability Fund, with a corpus of ₹150 Cr. This significant development will boost early-stage investments in startups working in electric mobility, renewable energy, agritech, circular economy, consumer brands, and SaaS sectors. The firm has already received commitments from key investors, including Atria Group chairman Sunder Raju and top executives from the sustainability sector.

The fund, categorized as a Category II AIF (Alternative Investment Fund), will invest in pre-seed and seed funding rounds for 20-25 startups over the next four years, with an average investment size of ₹2 Cr to ₹3 Cr. ZeCa Capital, founded by Pawan Raj Kumar and Aakash Kushwaha, focuses on investing in companies with a clear business model and proven customer traction rather than just research-based deeptech startups. The firm’s maiden investment was in GreenStitch, a sustainability-focused SaaS platform.

With India’s sustainability sector gaining momentum, ZeCa Capital aims to bridge the funding gap for startups that align with the country’s net-zero goals. The fund is expected to announce its first close at ₹40 Cr this month.

1. ZeCa Capital: An Overview

1.1 Founders and Vision

ZeCa Capital was founded in 2023 by Pawan Raj Kumar, a former partner at Venture Garage, and Aakash Kushwaha, an ex-Cuemath executive. The firm was established to address the funding challenges of early-stage sustainable startups that contribute to carbon neutrality. ZeCa stands for Zero Carbon, representing the firm’s commitment to sustainability.

1.2 Business and Investment Model

The firm operates as a venture capital fund focused on investing in startups with strong market validation, revenue traction, and repeat customers. Unlike many investors who fund deeptech research, ZeCa Capital prefers startups that have already secured customer engagement.

ZeCa Sustainability Fund aims to invest in 20-25 startups over four years. The average ticket size per startup will range from ₹2 Cr to ₹3 Cr, with a valuation range of $3 Mn to $6 Mn.

2. ZeCa Sustainability Fund: Investment Scope and Focus

2.1 Sector-Wise Investments

The fund will focus on four key investment buckets:

• Technology: Electrification of transport, renewable energy, and agritech innovations
• Software: Sustainability-driven SaaS platforms
• Consumer: Sustainable consumer brands
• Circular Economy: Startups involved in waste reduction, recycling, and sustainable manufacturing

2.2 Investment Strategy and Criteria

ZeCa Capital plans to focus on B2B startups, given the nature of the sustainability industry. The firm will not invest in startups engaged in pure research but will back those with proven revenue streams and customer engagement.

3. Market Context: Growing Sustainability Investments in India

3.1 Rising Interest in Sustainability Startups

India’s startup ecosystem is increasingly focusing on sustainability as the country aims to achieve net-zero emissions by 2070. Startups in EV, solar energy, and circular economy have seen a surge in funding. Several investment firms have launched sustainability-focused funds in response to this trend.

3.2 Comparable VC Funds

• Gruhas & Brigade Group’s Earth Fund: A ₹300 Cr fund investing in proptech and sustainability startups
• Avaana Capital: Closed an ₹1,135 Cr early-stage sustainability fund in 2023
• Green Frontier Capital: Launched a ₹1,500 Cr India Climate Opportunities Fund

4. The Road Ahead for ZeCa Capital

4.1 First Close of ZeCa Sustainability Fund

The fund has received initial commitments and expects to announce its first close at ₹40 Cr within the month.

4.2 Upcoming Investments

ZeCa Capital is evaluating fintech startups in the EV space, particularly those involved in battery efficiency and financing solutions.

5. Learning for Startups and Entrepreneurs

5.1 Key Takeaways from ZeCa Capital’s Strategy

• Customer traction is critical: ZeCa Capital prefers startups with proven revenue over research-driven deeptech.
• Sustainability is a major funding trend: Investors are actively backing EVs, renewable energy, and circular economy solutions.
• Early-stage funding opportunities are growing: More VCs are launching funds focused on sustainability.

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