In a resounding testament to India’s burgeoning startup ecosystem, venture capital firm Capital A has officially launched its second fund, with a substantial corpus of Rs 400 crore (approximately $50 million). This new fund, aptly named Fund II, is designed to accelerate the growth of startups in high-potential sectors such as manufacturing, climate tech, fintech, and deep-tech. The move aligns with the broader global trend of using venture capital to drive innovation in industries that are poised to reshape economies and build sustainable futures.
A Strategic Focus on High-Growth Sectors
Capital A’s launch of Fund II signals the firm’s commitment to nurturing innovative technologies and disruptive business models that can catalyze transformative change in key industries. The chosen sectors—manufacturing, climate tech, fintech, and deep-tech—are some of the most dynamic fields in today’s global economy, offering immense opportunities for scalable growth.
Speaking about the new fund, Ankit Kedia, the founder and lead investor of Capital A, emphasized the untapped potential of the manufacturing sector, stating:
“Many high-potential sectors, especially manufacturing businesses, are highly undervalued assets with great potential to scale quickly and become an important contributor in the startup ecosystem.”
This statement underscores the under-appreciation of traditional industries like manufacturing in the venture capital space, where innovation has often been more closely associated with sectors such as technology and services. However, with India’s increasing focus on self-reliance and the government’s push for Make in India, the manufacturing sector is well-positioned for substantial innovation-driven growth. New business models, automation, and technology integration are set to propel manufacturing companies into the future, which could lead to rapid scalability for the right startups in this space.
Climate tech, another key area for Fund II, is becoming an increasingly critical focus for investors globally. With the escalating urgency of climate change and growing regulatory and consumer demand for sustainability, innovations in energy, waste management, agriculture, and carbon mitigation have moved to the forefront. Venture capital firms like Capital A are responding to this demand by funding startups that develop solutions to combat climate change and promote sustainable practices.
Fintech and deep-tech remain strongholds of Capital A’s strategy, offering opportunities for groundbreaking innovation. Fintech has seen exponential growth in India over the last decade, driven by the digital transformation of financial services and a surge in digital payments. Meanwhile, deep-tech—which includes areas such as AI, blockchain, robotics, and quantum computing—is expected to create lasting disruptions across a wide array of industries.
Investment Strategy: Supporting Early-Stage Startups with Long-Term Potential
Capital A’s Fund II will continue its tradition of investing in early-stage startups, offering them initial investments ranging from $750,000 to $1 million. These startups will also receive additional funding of up to $2-3 million per company as they scale and move through their growth cycles. According to the company, Fund II will target investments in 17-20 startups, a deliberate approach designed to allow the firm to provide more concentrated support and deeper engagements with each portfolio company.
This level of funding and support is significant for early-stage startups, especially those working in sectors that require high capital expenditure (like manufacturing and climate tech) or have longer product development cycles (like deep-tech). In such fields, having access to follow-on funding can be a crucial factor in a startup’s ability to achieve sustained growth and success.
Capital A’s investment strategy is further bolstered by its ability to leverage a domestic investor base, comprising family offices, high-net-worth individuals (HNIs), and industry leaders. One of the prominent returning investors is Manjushree Ventures, a key backer from Capital A’s first fund. Manjushree Ventures’ continued partnership with Capital A underscores the confidence of institutional and private investors in the firm’s strategy and ability to generate returns.
This domestic-driven investment model is particularly notable in the Indian context, where a significant proportion of venture capital funding traditionally came from foreign sources. By mobilizing capital from within India’s own financial ecosystem, Capital A is helping to build a sustainable venture capital culture that is less reliant on international inflows and more resilient to global market fluctuations.
Leveraging the Success of Fund I
Capital A’s Fund I, launched in 2021, laid the foundation for the firm’s growth. The success of Fund I is exemplified by the notable performance of its portfolio companies, which include startups like Chargeup, Bambrew, Jiraaf, BharatSure, and Entuple. These companies have made a name for themselves in diverse sectors, ranging from electric vehicle (EV) infrastructure to sustainable packaging solutions, fintech, and insurance technology.
For instance, Chargeup, a startup specializing in battery swapping infrastructure for electric vehicles, has seen tremendous growth as India moves toward electrification of its transportation sector. Bambrew, a company focused on creating eco-friendly packaging materials, is another standout success, tapping into the growing demand for sustainable alternatives to plastic. These startups align with Capital A’s broader mission of investing in businesses that combine profitability with purpose—an ethos that is carried forward into Fund II.
Climate Tech: A Growing Priority for Investors
One of the standout features of Fund II is its emphasis on climate tech, a sector that has seen an upsurge in investor interest in recent years. According to the firm’s press release, climate tech investment in India has become more mainstream, with over 475 investors having entered the space since 2020. Notably, more than half of these investors became active in 2023 alone, highlighting the accelerating momentum behind climate-related technologies.
Last year, the number of climate tech investors increased by 25%, with 124 funds making their first investments in the sector. While overall funding growth has remained moderate, the significant increase in investor participation reflects a growing recognition of climate solutions as not only necessary for environmental sustainability but also as highly profitable areas for long-term investment.
In this context, Capital A’s focus on climate tech is both timely and strategic. Startups in areas such as clean energy, carbon capture, smart agriculture, and circular economy solutions are not only addressing some of the world’s most pressing challenges but also attracting increasing amounts of capital as governments and corporations commit to net-zero emissions targets. With climate change being one of the defining issues of our time, the ability of startups to innovate in climate tech will be crucial in shaping the future of global economies.
Deep-Tech: Unlocking Disruptive Potential
In parallel with its climate tech investments, Capital A continues to emphasize deep-tech, a sector that holds enormous potential for disruptive innovation. Deep-tech startups often operate at the intersection of advanced technologies like artificial intelligence (AI), robotics, and quantum computing, developing cutting-edge solutions that have the potential to revolutionize industries from healthcare to manufacturing.
However, deep-tech startups often face longer product development cycles and higher research and development costs, making early-stage funding all the more critical. Venture capital firms like Capital A play a crucial role in supporting these startups through their initial phases, allowing them to develop the foundational technologies that will shape the future.
Fintech: Building the Financial Infrastructure of the Future
Finally, fintech remains a cornerstone of Capital A’s investment strategy. India’s fintech landscape has experienced remarkable growth over the last decade, becoming a global leader in areas like digital payments, neo-banking, and financial inclusion. With the increasing penetration of smartphones and internet access across the country, fintech startups are playing a pivotal role in democratizing access to financial services.
Capital A’s continued investment in fintech is driven by its belief in the sector’s potential to reshape how financial services are delivered, particularly in emerging markets like India. Startups in this space are developing solutions that can improve financial literacy, increase access to credit, and enhance the efficiency of financial transactions, all of which contribute to economic growth and inclusion.
Capital A’s Long-Term Vision: Innovation and Sustainability
As Capital A sets its sights on a final close for Fund II by the end of 2025, its investment philosophy is clear: focus on companies that have the potential to not only generate long-term returns for investors but also address critical global challenges. This dual mandate of profitability and purpose is what sets the firm apart in the highly competitive venture capital landscape.
By concentrating on sectors like manufacturing, climate tech, fintech, and deep-tech, Capital A is positioning itself at the forefront of innovation in high-growth industries that will define the future of economies around the world. The firm’s commitment to supporting early-stage startups, combined with its focus on sustainability and scalability, is a strong indicator of the potential impact that its portfolio companies will have in the years to come.
As the Indian startup ecosystem continues to evolve, Capital A’s Fund II represents a bold step forward in harnessing the power of venture capital to drive transformative change. With its carefully curated portfolio of disruptive innovators and a strategic focus on high-growth sectors, the firm is well-positioned to continue its trajectory of success, contributing to both the economic and social development of India and beyond.