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Mumbai:BP Plc, International Finance Corp. (IFC), ministry of new and renewable energy, Technology Development Board and Indian Institute of Management, Ahmedabad (IIM-A), have joined hands to create Infuse Ventures, an India-centric investment fund to support start-ups in the sustainable energy and clean technology sector.

Infuse Ventures, which is raising a 125 crore fund, had its first closing at 75 crore on Friday and has already made its maiden investment.

The new fund, along with IFC, has invested $1.6 million in smart grid technologies provider Ecolibrium Energy Pvt. Ltd, which has been incubated at the Centre of Incubation, Innovation, and Entrepreneurship at IIM-A.

The investment in Ecolibrium Energy is also the first transaction by Cleantech Innovation Facility, a $60 million financial mechanism, co-sponsored by the IFC and the IFC-GEF Earth Fund, to make smaller, high-impact equity investments around the world.

“We believe there are some very interesting business models that need to be created in India to scale clean tech and sustainable energy. With active support from our investors and ecosystem partner, Infuse is well positioned to mitigate risks that these companies face in taking these ideas to the market," said Kunal Upadhyay, chief executive, Infuse Ventures.

Ahmedabad-based Ecolibrium Energy offers technology-enabled solutions that help meet the needs of utilities and grid operators who deliver energy and are responsible for maintaining the real-time balance between supply and demand. The platform is hosted on remote servers and available through the Internet. A customer can access this system from any part of the world. The company has at least 50 clients across India in one year of commercial operations.

“We would use the funds mainly to increase our efforts on product development and offerings to the clients. Apart from commercial and industrial customers, we will seriously look at micro grids, renewable energy and demand response," said Chintan Soni, co-founder and director at Ecolibrium Energy.

The investors are actively hand-holding the company to explore new opportunities in the renewable integration and energy management space. On the issue of what attracted IFC to Ecolibrium Energy, Pravan Malhotra, who leads IFC’s clean technologies investment team in South Asia, said they saw the immediate benefit the company’s core business of IT-enabled industrial energy efficiency and the short payback for customers.

“It was their longer term goal of being India’s first demand response player and working closely with utilities to optimize energy usage in peak periods that excited us to be able to support this pioneering innovation," Malhotra said, adding that IFC plans to invest more capital as the company grows.

Infuse Ventures will invest capital in companies across India and actively incubate ideas from scratch. The fund will invest in the range of 50 lakh to 6 crore and can put more capital, if required. It will typically take stake between 20% and 30%. For incubating companies and entrepreneur-in-residence programmes, the structure may vary.

Over a period of three to four years, Infuse Ventures will look at backing 15 to 20 start-ups and incubate five to 10 ideas.

“We are looking at creating and investing in capital efficient models with a quick go-to-market possibility rather than technology inventions, which have much longer gestation periods" Upadhyay said, adding that these could include renewable energy generation and distribution, energy efficiency, bio energy, clean web, water and waste management.

IFC, one of the most active investors in India, has taken a strategic call to invest in early stage companies in high impact sectors and created the clean tech equity investment team in 2010. While their typical investment size is $5 million (and above), they started Cleantech Innovation Facility to make smaller equity investments.

On challenges in the clean tech space including long gestation periods and capital extensive nature, Malhotra said it depends on the segment one wants to invest in.

“While renewable project plays are asset heavy and require ongoing capital, there are more capital efficient models like innovative IT-enabled green solutions, energy efficiency products, water management, agri tech, among others," Malhotra said.

India has substantially strengthened its renewable energy plans in the past few years. The government now aims to add 17 gigawatts of renewable energy generation capacity by 2017, which will require up to $33.8 billion in new investments.

Experts say there are many opportunities in the clean tech space for deep pocketed investors. “I believe there are many start-up investment opportunities that are yet to be exposed. What we have come across so far are prominently in the street light or the smart metering space," said Anil Joshi, vice president at Mumbai Angels, one of India’s largest angel investors group.

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