Climate tech investment in India: check buyers and policy

Climate startups sell to buyers who move slowly, under policies that move fast. Diligence has to check both clocks.

A rooftop solar installer in Nagpur, an EV charging company in Gurugram, a startup selling emissions tracking to cement plants: on paper, they're riding a wave of public money and new rules. In practice, their customer might be a power distribution company that pays in months, or a household waiting on a subsidy. You're investing in both the product and the policy behind it. Start with the six checks in our guide to evaluating early-stage startups, then add the two clocks below.

Why does climate tech diligence check two clocks?

Climate startups in India usually depend on two things they don't control: a buyer with long sign-off and payment cycles, and a scheme or rule that creates the demand. Your diligence asks how long the buyer takes to sign and pay, and what happens to revenue if the scheme changes. A company can be right on both. And still run out of cash in between.

Diligence itself already takes time. In a survey of 885 venture capitalists by Gompers, Gornall, Kaplan and Strebulaev, the average deal took 83 days to close. That's across sectors, and mostly American. You can't read it as an Indian climate number. You can read it as a warning: if your own process takes three months, the founder's buyer may take longer.

How long do climate buyers take to sign and pay?

The buyer clock measures how long it takes from first meeting to signed order, and from invoice to cash. For climate startups selling to utilities, government bodies or large factories, both can stretch over many months. Ask for the real dates on the last ten deals. Then you plan the company's cash around them, not around the deck. Dates don't lie. Decks can.

Who actually pays

List every customer type: household, factory, state power distribution company, government department, private developer. Each one pays differently, and you'll want to know how. A household pays on installation, sometimes waiting for a subsidy. A distribution company pays on its own schedule. Ask for receivables ageing by customer type. It's the single sheet that shows whether growth is turning into cash.

Pilots versus orders

Some climate decks are full of pilots with famous names. A pilot isn't an order. So ask which pilots turned into paid contracts, how long each one took to convert, what the contract value was and who signed it on the customer's side, because a pilot approved by an innovation team can die in procurement. If none have converted, you're looking at a sales cycle, not a business. Yet.

Late payment

India has rules on late payment by distribution companies, including the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022. Ask whether the company has ever invoked them, or would. A startup rarely wants to fight its only customer. That's the point: you're checking how much power the buyer holds.

How fast can the policy behind demand change?

The policy clock measures how much of the company's demand comes from a scheme, subsidy, tender or rule, and how quickly that support could change. Name the exact source behind each revenue line. Then ask the founder what the business earns if that support shrinks, ends or gets redesigned. You'll know in a minute. A founder who's thought about it has a spreadsheet; one who hasn't has a story.

Take rooftop solar. In December 2025, All India Radio reported a Rajya Sabha reply on PM Surya Ghar Muft Bijli Yojana: an outlay of ₹75,021 crore, a target of one crore households by FY 2026-27, and over 19 lakh rooftop systems installed so far. That's real, funded demand. It's also demand with an end date, and you're the one who has to price that. What does an installer's pipeline look like after the target year? Ask.

Carbon markets are moving too. The Ministry of Power notified the Carbon Credit Trading Scheme, 2023 on 28 June 2023 under the Energy Conservation Act, 2001. It created an Indian carbon market with obligated entities under a compliance mechanism and non-obligated entities that can buy carbon credit certificates. If a startup's revenue depends on carbon credits, check which side of that line its buyers sit on, and which rules apply today rather than next year.

In climate, the policy is part of the product. Diligence the rule as hard as you diligence the founder.

How should you size a climate market in India?

Some climate decks open with a global climate market figure in trillions. Ignore it. You can't sell to a trillion. Build the market from the Indian scheme or rule that creates demand: the government's target, what's already installed, the share the company can reach and what one customer pays. Your number will be smaller. You'll also be able to defend it in your investment committee, which is the point.

For rooftop solar, the gap between the household target and installed systems is the visible market under the scheme. It isn't all addressable by one installer in one state. Our method for checking market size claims walks through the bottom-up version. And for grants and public funds a climate startup may also tap, see our guide to government funding for startups in India.

What goes on a climate tech diligence checklist?

• Real dates from first meeting to order, and invoice to cash, for the last ten deals.
• Receivables ageing by customer type.
• Pilots that turned into paid contracts, with values.
• Each revenue line mapped to the scheme, rule or tender behind it.
• A model of revenue if that support ends or shrinks.
• For carbon revenue: the buyer type and the rules that apply today.

What should you do before the partner meeting?

Draw both clocks on one page before your partner meeting. It won't take long. If the cash runs out before the buyer pays or the policy settles, you've found your real question.

Climate revenue often rests on contracts with slow buyers and on policy, so client agreements and compliance carry extra weight.

Questions

What is different about due diligence on a climate startup in India?

Demand often comes from a government scheme, a regulation or a public buyer such as a power distribution company. So you check two things beyond normal diligence: how slowly the buyer signs and pays, and how exposed revenue is to a change in the scheme or rule that creates it.

How big is the PM Surya Ghar rooftop solar scheme?

The scheme has an outlay of ₹75,021 crore and targets rooftop solar for one crore households by FY 2026-27. In December 2025, All India Radio reported a Rajya Sabha reply that over 19 lakh rooftop systems had been installed under it.

What is India's Carbon Credit Trading Scheme?

The Ministry of Power notified the Carbon Credit Trading Scheme, 2023 on 28 June 2023 under the Energy Conservation Act, 2001. It sets up the Indian carbon market, with obligated entities under a compliance mechanism and non-obligated entities that can buy carbon credit certificates voluntarily.

How should investors size a climate tech market in India?

Start from the scheme or rule that creates demand. Use the government's own target and installed numbers, find the share the company can serve, and multiply by what one customer pays. Treat any global climate market figure in a deck as context, not as the company's market.

Sources: All India Radio (News On AIR), 7075.78 MW rooftop solar installed under PM Surya Ghar Muft Bijli Yojana (Rajya Sabha reply), 9 Dec 2025 · Ministry of Power, Carbon Credit Trading Scheme, 2023, Gazette of India S.O. 2825(E), 28 Jun 2023 · Gompers, Gornall, Kaplan and Strebulaev, How Do Venture Capitalists Make Decisions?, NBER Working Paper 22587, 2016

For more on how startup funding works in India, read the MyStartupValley blog or visit mystartupvalley.com.