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Guest Column

Published on: Nov. 8, 2021, 5:35 p.m.
Playing a catalytic role
  • Addressing the environment problems across a diverse set of topics – air, water, waste and land use

By GV Ravishankar. The author is MD, Sequoia Capital, ACT Environment

In March 2020, a number of us from the VC and startup ecosystems came together to understand how we could support the fight against Covid at scale. Over the following 15 months and two intense waves, the work we did at ACT Grants (www.actgrants.in) towards Covid response made clear to us the power of collective action and collaborative finance. It also demonstrated the multiplier effect of partnering with multiple stakeholders across an ecosystem – government bodies, community groups and corporates – for systemic problem-solving. We call this “open architecture” and by allowing people with diverse ideas and networks to come together and operate in a platform which they see as their own, we are able to harness the power of many “co-founders of change”. 

The learnings from the healthcare efforts at ACT Grants helped us apply similar principles of catalytic support, scale and partnerships to other systemic challenges in the country, and inspired the creation of the ACT Environment Fund. A few of us within the VC community were passionate about doing our bit to make a change to the climate finance market. We wanted to use the venture capital model of giving wings to what seem like risky early stage ideas where a few of them will go on to build solutions of scale and have disproportionate impact and adoption. We felt strongly that we needed this type of catalytic capital but in the form of grants with no financial return implications so we can take some real risk on out of the box innovations.

The ACT Environment Fund operates as a relatively unique venture philanthropy fund that aims to support models, technology, delivery and process innovations as well as mechanisms for adoption that can have outsized positive environmental impact. We make grants (few tens of lakhs to a few crores) to companies that want to test an idea and take it to market or scale an existing idea to demonstrate impact at scale. Coming from the venture capital world, we are aware of how powerful new ideas executed by visionary founders can make a dent in the universe. We hope to find and fund similar ideas that can change the world for the better! 

Climate innovation in India needs transformative support in areas like strengthening business models, creating infrastructure, demonstrating innovations at point of use, and creating or expanding niche markets to become mainstream. Our focus at ACT Environment is to play this catalytic role, providing support in these critical gap areas, with a view to enabling other funders to follow-on.

We made a few core design choices for the fund: 

We decided to operate as a bazaar (or a platform) where “like-minded” people could come together, work with each other and create impact. We want companies to join us and build along and on top of what we will build with our grantee companies. For us, reaching the goal is more important than having the credit, and we will work towards broadbasing and progressing the understanding of climate through playbooks and Learning Labs.

We decided to allocate 20-30 per cent of the fund towards 0 to 1 stage where we have high impact but low probability of win type innovations – we believe some of these will end up having disproportionate impact. The remaining capital will go into proven ideas that need capital to scale. We aren't taking the 0 to 1 risk but our capital will help us scale their go to market. 

We decided to address the environment problems across a diverse set of topics – air, water, waste and land use – as many of these are deeply interconnected in ways that are not obvious. By taking a sector-only approach, we believe we would run the risk of missing important connections or unintended consequences. We are deeply grateful for the guidance of a number of industry experts on this particular aspect of our work – they extend our understanding and provide much-valued direction.

We are happy to see some early traction in our work. We are supporting a solution that attempts to systemically and scalably address the pervasive issue of stubble burning, while being very cognizant of the ground realities for farmers; we are evaluating solutions that create value from the lowest value waste, models that can sustainably support the communities who safeguard our forest and natural ecosystems, data and analytics that can aid critical decision-making, and technology innovations that can provide improved water security and efficiency in our homes and on our farms.

We will shortly be announcing a collaborative challenge that has an ambitious aim – addressing the quality of the air we breathe. This challenge will partner with innovators, funders, incubators, corporates, governments, communication experts and communities, to create inclusive and sustainable climate action at scale.

In the coming months, ACT Environment will also be exploring other ways to engage more closely with corporates and startups, to make climate and environment an integral and natural part of all organisation growth journeys.  

ACT Grants is built on the foundational belief that everyone can be a Co-Founder of Social Change. With ACT Environment, we extend that to a belief that everyone can have an environmental impact.

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