Neev II Fund: How India’s Climate-Tech SME Growth Story Is Being Fuelled by Public Support

Introduction to the Neev II Fund

2021 was the year marking the launching Neev II Fund by SBI Ventures Limited. It channelled public and institutional capital into India's climate-tech SMEs to drive scalable green innovations. Receiving backup from global partners like the European Investment Bank, UK government and JICA, it bridges financing gaps for high-potential firms tackling clean energy and circular economy challenges.

Fund Origins and Structure

Neev II Fund emerged as the successor to Neev I, which targeted infrastructure in low-income states through a State Bank of India-UK partnership. Launched in June 2021 by SBI Ventures (formerly SBICAP Ventures), it shifted focus to pan-India climate-tech SMEs with a ₹10 billion corpus, equivalent to about $120 million.

Among the institutional backers the Small Industries Development Bank of India (SIDBI), the Foreign Commonwealth and Development Office (FCDO), the European Investment Bank (EIB), the State Bank of India, the Japan International Cooperation Agency (JICA) and Self-Reliant India (SRI) Fund were the outstanding ones and are known for removing risks from investments in new sectors, viz. green hydrogen and waste management as well as providing catalytic capital.

The fund deploys equity stakes of €5-20 million, securing minority positions with board seats and sustainability reporting mandates. Quarterly and annual reports track GHG emissions and gender metrics, bolstered by external impact assessments.

Investment Focus Areas

Neev II targets growth-stage SMEs with proven technologies and order books needing scale-up capital. Core sectors span clean energy production, electric vehicles, resource efficiency and circular models addressing India's low-carbon transition.

Portfolio companies exemplify this: Hygenco deploys green hydrogen assets using renewables; Nutrifresh Farm Tech pioneers hydroponic farming for residue-free produce; GPS Renewables advances biofuels like Compressed Biogas (CBG); Chakr Innovation cuts diesel generator emissions; Blue Planet manages legacy waste; Solinas applies robotics to water sanitation.

The investments received the final-moment impact on areas that are under-served; doing this aligns with India's NDCs for emission cut goals by the year 2030 and net-zero target by 2070. Public support enables focus on high-risk, high-reward innovations overlooked by private equity.

Public Support Mechanisms

Public backing fuels Neev II's model through blended finance and non-financial aid. Limited partners offer technical assistance, international market linkages (e.g., Japan, UK, EU) and policy advocacy with Indian regulators to build sector confidence.

The SBI's scale as India's largest bank anchors credibility, while EIB and JICA provide concessional capital for climate goals. FCDO and SIDBI emphasise SDGs and MSME growth, mobilising ₹11 billion in follow-on funds for every investment tranche.

This structure yields leverage: Neev I mobilised €3-4 per euro invested. Neev II signals viability to commercial lenders, fostering ecosystems in green hydrogen and bio-CNG where private risk aversion persists.

Regulatory and Policy Alignment

India's SMEs drive 30% of GDP and 45% of exports but face climate finance gaps amid NDC pressures. Neev II counters this by funding resilience-building firms integrated with local ecosystems.

The fund engages policymakers on enabling frameworks, from waste-to-energy incentives to green hydrogen subsidies. Portfolio successes, like GPS Renewables' IOCL-BPCL joint ventures, demonstrate scalable models informing national strategies.

ESG frameworks draw from IFC Standards, EIB guidelines and GHG Protocol, ensuring compliance while advancing gender equality and green jobs. This hands-on approach aids SMEs in regulatory navigation and governance upgrades.

Design Evolution Lessons

Neev II refined Neev I by dropping geographic limits and pivoting to climate-tech market gaps under-served by traditional finance. An Environmental Social Management System (ESMS), LP-supported, embeds risk mitigation from sourcing to exit.

Due diligence by external experts screens 60-70 applicants per viable deal, assessing value chains and management. Impact measurement integrates IRIS+, SDGs and economic-environmental-social pillars for data-driven scaling.

Challenges like ineligible applications highlight rigorous criteria, yet yield quality portfolios blending returns with outcomes. Gender Action Plans mandate female workforce growth and equal pay, tracked over 6-18 months.

Demonstrated Impacts

The 2024 Impact Report reveals transformative results: 3,500+ jobs created (317 for women), 56,000 gaining clean energy access, 65,000 using clean transport, 2.3 million benefiting from air quality gains, 1.1 million tonnes legacy waste managed and 0.22 million tonnes CO₂ avoided. 

Portfolio unlocked ₹11.2 billion in leverage, with 2,665 MT sustainable produce and 40.9 acres barren land restored. SDG contributions span goals 2,5,7,8,11,13, amplifying NDCs via last-mile delivery. 

These metrics, cumulatively since inception, underscore public capital's multiplier effect in job-rich, emission-cutting growth.

Portfolio Spotlight

Company	Sector Focus	Key Outcomes
Hygenco	Green Hydrogen	Scaled BOO/BOOT assets replacing fossil fuels.
Nutrifresh	Sustainable Ag	40+ residue-free varieties; 100+ B2B clients; Forbes recognition.
GPS Renewables	Biofuels/CBG	IOCL-BPCL JVs; Asia's largest BioCNG plant; Platinum ISGF Award.
Chakr Innovation	Air Quality	70% pollutant cuts from generators; G20 Sherpa praise.
Blue Planet	Waste Management	Full value chain; Tamil Nadu/Gujarat summits.
Solinas	Water/Sanitation	AI-robotics for leaks, no-scavenging cleaning.

These firms, with ₹6.5 billion committed, drive innovation while maturing ESG practices under Neev II guidance.

Success Drivers

Strong branding from Neev I attracts LPs; ESG integration via action plans boosts portfolio sustainability. Beyond capital, advisory on governance, reporting and TA expands opportunities.

Catalytic signalling de-risks sectors: early green hydrogen bets draw banks. Minority stakes enable influence without control, appealing to co-investors; COVID-delayed exits now proceed via buybacks.

Thought leadership—panels on green finance, IIC roles—elevates visibility. Investees shine at Harvard conferences, Vibrant Gujarat, amplifying public-private synergy.

Future Growth Catalysts

Neev II's model positions India's climate-tech SMEs for exponential scale amid rising emissions vulnerability. Public support via guarantees and blended finance, as in NIIF clean energy, will sustain momentum.

Policy wins from portfolio learnings could unlock more MSME credit. With the SBI's net-zero pledges, Neev II eyes deeper NDC alignment, targeting 10% green advances.

Expanding to SAF biofuels and precision ag holds potential for 10x impact, drawing global capital as India leads Global South transitions.

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