Venture capital firm Transition VC is raising a ₹1,500 crore second fund to invest in energy hardware startups. The firm aims for a first close by the December 2026 quarter, targeting sectors like energy storage and thermal power. This move highlights growing institutional interest in India’s renewable energy sector as the nation works toward its 2035 non-fossil capacity goals.
Detailed Coverage
Transition VC has announced plans to launch its second fund with a target corpus of ₹1,500 crore, doubling the size of its initial investment vehicle. The firm’s first fund, which closed at ₹800 crore in December 2025, supported 23 companies. For this new fund, the firm expects to reach its first close during the October-December quarter of fiscal year 2027.
Strategic Shift Toward Energy Hardware
This fundraise reflects a broader trend among investors focusing on India’s energy transition. While large-scale solar and wind projects continue to draw infrastructure capital, venture funds are increasingly looking at energy hardware, such as advanced battery solutions, energy networks, and thermal storage. These areas are vital for managing the intermittency of renewable energy. The government’s goal to source 60% of installed electric capacity from non-fossil sources by 2035 is driving demand for domestic innovation in these hardware sectors.
Transition VC intends to invest in approximately 20 startups through this new fund, with individual investments typically ranging between ₹20 crore and ₹50 crore. The firm’s investment strategy focuses on companies that have already moved past the prototype stage and are seeking funds to scale customer acquisition. A key requirement for their portfolio companies is the ability to generate $8 million to $10 million in revenue while maintaining a positive operating profit, or EBITDA.
Investment Approach and Market Outlook
Unlike some venture firms that take small minority stakes, Transition VC often secures a 20-25% equity interest in its portfolio companies. This approach is intended to provide the firm with greater influence and higher returns upon exit. The firm reports an internal rate of return of 57% on its first fund, suggesting that despite the capital-intensive nature of energy hardware, there are paths to profitability for companies with strong product-market fit.
The energy storage sector in India is currently benefiting from technological advancements and a push toward indigenous manufacturing. Market analysts project the Indian next-generation energy storage market to reach $3.9 billion by 2031. As global and domestic interest rises, potential exit routes for these startups are also evolving. While mergers and acquisitions by larger energy players remain common, more startups are reaching a scale where public market listings through IPOs are becoming a viable long-term objective.
For investors, the primary monitorable will be the company’s ability to find startups that can scale operations without needing excessive cash burn. As the fund begins deployment, the focus will remain on the progress of its portfolio companies in establishing reliable revenue streams and successfully integrating their technologies into India’s broader energy grid.