Transition VC targets ₹1,500 crore for second energy-focused fund
The second fund is nearly double the size of Transition VC's maiden ₹800 crore (around $77 million) investment vehicle.
Summary
The second fund is nearly double the size of Transition VC's maiden ₹800 crore (around $77 million) investment vehicle.
Energy-focused venture capital fund Transition VC has begun raising a ₹1,500 crore (approximately $155 million) second fund, according to one of its co-founders.
“We want to repeat exactly what we did with fund one with far more resources, not just with capital but also with a team to support them to scale,” said Raiyaan Shingati, co-founder and managing partner at Transition VC, in an interview with Mint.
The second fund is nearly double the size of its maiden ₹800 crore (around $77 million) investment vehicle, which achieved its final close in December 2025. Transition expects to announce the first close of Fund II in the December quarter of FY27.
The larger fund lands at a moment when India's energy hardware sector, long seen as too capital-intensive and slow-moving for venture money, is drawing more institutional interest, given the country's targets for energy transition.
In March, Union cabinet minister for electronics and information technology Ashwini Vaishnaw announced that by 2035, India would have 60% of its installed electric capacity comprising non-fossil sources. This is one of the targets under India's Nationally Determined Contributions (NDCs), submitted to the UN as part of its climate commitments.
While greenfield renewable energy projects continue to require a large amount of capital, companies building storage solutions and in adjacent areas are where venture capital is looking to park money. Venture funds are betting that these companies stand to scale and generate sizeable revenues.
Similar thesis
Transition backed battery infrastructure companies heavily through Fund I. However, while that thesis remains broadly the same, the firm has added other areas, including energy networks, thermal energy storage, advanced materials for energy-adjacent sectors, and geothermal energy.
The firm evaluates companies based on its belief that while some areas have been taken over by other countries, such as China in electric battery cells, there are spaces where Indian founders have a right to win. “Thermal energy storage is really attractive because industries fundamentally require heat,” said Shingati. “Storing heat directly is far more efficient and costs a third of battery storage. India is ahead of the curve on building that capability at the moment.”
India's next-generation energy storage market is estimated to be at $2.4 billion this year and expected to grow at a compound annual growth rate of 9.5% to hit $3.9 billion by 2031, according to market intelligence platform Mordor Intelligence.
For energy hardware and storage companies, there finally seems to be credible exit pathways for investors, according to experts.
“While IPOs are becoming increasingly viable for scaled businesses with differentiated technology, strong manufacturing capabilities and predictable revenues, M&A remains the more active and immediate route, driven by strong strategic interest from global hyperscalers, utilities, infrastructure funds and energy majors,” said Vasudha Madhavan, founder and chief executive of climate investment banking firm Ostara Advisors.
While Transition is keen on investing in nuclear energy, it won't be writing a cheque to these companies in the initial years of Fund II. Instead of directly backing such startups, the firm plans to back founders working in the nuclear energy value chain.
To be sure, funding for nuclear energy startups has been nothing if not weak. Pranos Fusion raised a $6.8 million seed cheque in March from pi Ventures and Ankur Capital. In 2024, Hylenr Technologies raised $3 million in a pre-series A round from Valour Capital and Chhattisgarh Investments, while Anubal Fusion raised $294,000 from longtime deeptech investor Speciale Invest that year as well.
Enter early, pare late
Like most early-stage venture investors, Transition writes cheques anywhere between ₹20-50 crore ($2-5 million). The key difference, however, is that the firm is looking for companies that have already built a product but are now seeking customers and product-market fit (PMF).
Transition doesn't invest in businesses that require burning a large amount of cash, instead opting for companies that are running at positive unit economics.
“We're looking for companies where we see that our capital helps them achieve PMF (product-market fit) at scale, which we define as hitting $8-10 million in revenue while still being Ebitda positive,” Shingati said. Ebitda stands for earnings before interest, taxes, depreciation, and amortisation.
On average, the firm picks up a 20-25% stake in a company when it writes the first cheque, slightly higher than the average 15-20% that most early-stage investors take. In some cases, the firm may write a larger cheque but pick up even a 30% equity stake.
As a result, the firm is selective even in how it backs winners in its portfolio so that it has enough capital to be able to allocate to future rounds to maintain the stakes it has. Transition has no plans to hold just 5% by the time it's ready to exit.
“When we're prepared to exit, whether at a series D, pre-IPO or IPO, we want to still be holding 15-20%,” said Shingati. “That's a very massive outcome, because the MOIC comes from absolute returns on your stake ownership, rather than how big a company becomes.” MOIC stands for multiple on invested capital, a metric used by venture capital and private equity firms to track the absolute return on an investment.
Transition's Fund I consists of a portfolio of 23 companies, with the firm expecting to be fully deployed by the end of 2026. According to the firm, Fund I has so far delivered a 57% internal rate of return and generated over 3x MOIC. Fund II will see the firm back 20 startups.
About the Author
Rwit Ghosh
Rwit is a correspondent at Mint covering India’s burgeoning startup ecosystem and the venture capital and private equity firms that back them. Sitting out of Bengaluru, he writes on the new-age tech businesses that the city and the rest of the country seems to continuously be birthing.
While Rwit’s interests lie in covering the new wave of deeptech, AI, SaaS and consumer tech businesses, he’ll write on consumer brands and fintech (if someone repeatedly explains these sectors to him).
When he’s not scrolling through the Indian startup forums on Reddit, Rwit is usually trying to figure out early signs of what’s to come next in the ecosystem. As a result, he’s been early to spot trends like VCs becoming more active in backing deeptech, funding bottlenecks for agentic AI startups and a potential revival in edtech through AI.
Prior to his ongoing stint at Mint, Rwit worked at NDTV Profit as a social media producer while also working on his own stories for the TV channel after he graduated from the Asian College of Journalism in Chennai.
When he’s not working on stories, he can be found trying to figure out where he should go to eat next in Bengaluru, or what his next tattoo should look like. If you see him in the wild, you should ask him how he pronounces his name. He’s definitely not tired of being asked about it.
Source: Livemint — Companies
