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Energy transition-focused venture capital firm Transition VC has launched its second fund with a target corpus of ₹1,500 Cr (over $155 Mn) to invest in engineering-led startups working across segments like energy transition, advanced manufacturing and industrial deeptech.

The Bengaluru-based VC firm plans to invest between $2-5 Mn in over 20 startups over the next four years, with deployments set to begin in the third quarter of the ongoing fiscal year FY27.

The fund has already received commitments from several existing limited partners, while also seeing interest from global institutions, corporate investors and family offices, the firm said.

The VC firm claims to have fully deployed its first fund, which closed at ₹723 Cr, exceeding its initial target of ₹400 Cr. According to the firm, Fund I generated a 57% internal rate of return (IRR) and delivered more than 3X multiple on invested capital (MOIC) within the next three years. 

With the first fund, the VC firm focused on investing in cleatech startups operating in sectors such as electric mobility, green hydrogen, energy storage and climate technology. It backed 17 startups, including CIMware, Comminent, Matel, EMO, HYDGEN, Dynolt and Promethean, with cheque sizes typically ranging between $500K to $1 Mn. 

With Fund II, Transition VC will continue investing in energy transition startups while expanding its focus to advanced manufacturing and application engineering. It will also selectively evaluate opportunities in sectors such as semiconductors, nuclear energy, geothermal technologies and next-generation energy infrastructure.

The firm said it will continue to focus on startups that have demonstrated technical feasibility and early commercial traction but are yet to achieve product-market fit at scale.

The launch comes as investors continue to increase their exposure to industrial deeptech startups. Earlier this year, PE firm Lightrock unveiled a $500 Mn energy-focused fund, Accelerate7, to back growth-stage startups across South Asia, Southeast Asia and Sub-Saharan Africa.

In India, the fund is looking at sectors such as energy storage, electric mobility, sustainable energy transition, energy financing and other enabling technologies, with cheque sizes ranging from $10 Mn to $50 Mn.

Notably, Lightrock has already deployed capital from the fund in India, leading funding rounds in commercial EV maker Euler Motors and rooftop solar startup SolarSquare. 

Besides Lightrock, several investors have launched dedicated climate and energy transition funds over the past year, betting on startups building clean energy, decarbonisation and advanced manufacturing technologies as the sector continues to attract investor interest.

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