Anjali Bansal, Founding Partner of Avaana Climate and Sustainability Fund, talks about factors in building a sustainable ecosystem during a conversation with Mridula Ramesh, Founder of the Sundaram Climate Institute and Executive Director of Sundaram Textiles Ltd.
Mridula Ramesh: Climate is something we all talk about, and it’s gaining more and more importance. There is a gold rush for climate tech investing. Everybody is going into EVs. Why is waste not part of the story?
Anjali Bansal: Even five years ago, we didn’t have many takers for climate as a commercial investment. Certainly, it was a focus in terms of energy security and fossil fuels, but there was still debate on, “Is global warming real?” We always go through these eras of cooling and heating in the Earth’s history. There were deniers even five years ago. Today, at least, we don’t have deniers. That change has happened because you feel it every day with record temperatures and completely erratic monsoons. In the Global North, they worry about heating. Here, we worry about cooling.
In countries like ours, it is a matter of both life and livelihood. We have impacts on life and health, and we also have issues of livelihood. Farmers can’t grow their crops because of flooding. There are hazards to health in certain occupations. So life and livelihood are impacted.
Fifteen years ago, the first cycle of ‘clean tech’ happened. Even solar was not commercially viable. It required subsidies, and hence the first cycle of clean tech investing failed. With shifting cost curves, things have changed. Today, a new unit of renewable energy is cheaper than a new unit of thermal energy, so it makes business sense. For any company or industry, it makes no sense today not to have renewables.
EVs also happened because we started seeing the actual cost benefits in the OPEX. That, combined with government incentives, keeps the EVs running. We are now talking about hybrid as a better intermediate solution. For waste, I think the time is coming. I can feel it. I know you can feel it. When the combination of a burning social need, a consumer need, and an economic need meets with technologies that are viable and commercially scalable, then changes happen.
We need the intersection of four key stakeholders: society, technology and innovation, government and policy, and capital. There needs to be real demand from society. Now we are trying to solve the problems of plastic and fossil fuels. But at one time, plastic was a miracle material. Fossil fuels were a miracle when they were discovered and processed for use as fuel. They fuelled the industrial revolution, took the average human lifespan from 45 to 85 and beyond, and created enough consumer surplus in the global economy to invest in healthcare, education, and a far better quality of life.
Plastic is not evil, nor are corporates evil. It’s very easy to blame corporates because they use plastic wrappers. Are you likely to buy a biscuit that is not crisp because it was not wrapped in plastic or that might run the risk of contamination because it was not airtight? We must develop real alternatives. We need to invest in innovation and technology for alternative materials that can replace plastic and yet be biodegradable. Consumer demand will be a significant player.
The other actor, therefore, is technology and innovation to provide solutions. Corporate action goes hand-in-hand with consumer demand. You need civil society, but you also need government and policy. Fourth is capital. 100% of capital is required, but you need the full capital stack. It’s not just equity or risk capital. You need philanthropy, policy-based concessional capital, developmental capital, equity, and debt. That capital stack has yet to develop. I’m an eternal optimist. There’s always progress happening. We are now getting traction on developing the full capital stack. For those who want to build in waste, do not look for VC. We need to work across our ecosystem. We may need to create working capital financing for waste, much like microfinance did 30 years ago.
Mridula Ramesh: Why are some cities getting it right and others not? Indore or any of the top five cities in the Swachh Survekshan list are doing something special.
Anjali Bansal: I grew up in Surat, Gujarat. Surat has the very dubious distinction of being the only urban center to have suffered from the bubonic plague in the modern era. Surat went from being the dirtiest to being the cleanest. They had to redesign the city, and everything came together, much like it did in Indore. Indore didn’t face as severe a crisis as Surat did. In Surat, a citizen’s movement, an enlightened bureaucracy, political support, and partnerships with civil society and local corporates worked together to make it happen. That’s why some cities are getting it right. Additionally, it was a manageable scale. Chennai is almost the size of Israel and requires everyone to act together.
Mridula Ramesh: As an investor in this space, what are some of the things you look for?
Anjali Bansal: We look at the size of the problem. If it’s a big problem, it implies there will be a significant market for that solution. Not all problems are ready for equity investment. If there isn’t a large market opportunity, it’s probably not ready for equity investment, so we wait. We look for truly innovative, technology-led solutions. At our Avaana Climate Fund, we seek a model that is competitive and scalable. There must be a business model on top of the technology. Technology alone does not create the enterprise; the business model does. We also analyse the quality of the team, their passion, their right to play, and their right to win. Do they bring something unique? Are there complementary skill sets? That’s what we look for.
Mridula Ramesh: We’ve seen some startups addressing the problem. What aspects of the waste or climate problem are you not seeing solutions for, and for which you wish startups would focus on?
Anjali Bansal: Core science is one area. Universities or corporates must invest in alternative materials to eliminate plastic from the chain itself. I dream of a world that is 100% renewable. Another dream is a world without plastic. Finding real solutions for the water problem is also high on my list. Transitioning from an NGO model that works to a replicable and commercially scalable model is where we need to spend more time and effort.
Mridula Ramesh: Real demand comes from policies such as those requiring companies like Unilever to start using recycled materials. We are not segregating the waste; there is an onus on us—the public. I will share a personal story. When I started on this, I knew nothing about it. We began segregating waste in our house. By doing this consistently, we saved 45 tons from going into the landfill over the last eight years. Imagine, this is just from one house.
Anjali Bansal: I call it a net-zero home, and it is absolutely phenomenal. It shows you can do it if you want, not just because of purpose and passion, but by making it convenient. For the most part, policy and regulation have played a fairly positive role, at least in India, where we are not divided on the issue of climate adaptation and resilience. In the country, EPR (Extended Producer Responsibility) has created a market for plastic that didn’t previously exist. I think it is time to create a market for e-waste as well. We have to think about a second life for EV batteries, and business models should evolve around that. We must look at recycling, reusing, and repurposing.
Mridula Ramesh: We have an energy industry, an EV industry, a food industry, and large plastic and chemicals industry. Where is the waste industry? If there were a waste industry association, it could represent itself with both local and national governments and engage in awareness creation.
Anjali Bansal: Based on my experience with NITI Aayog, the government is also looking for solutions. The government cannot be the creator of solutions. They will typically seek solutions from industry or civil society. It will take time and process, culminating in either enabling positive regulation or negative regulation. It could be an incentive or a tax, like in the case of EPR, that helps in market creation. With NITI Aayog, there is a defined program on climate, and there is a senior person—a program director for climate—who is looking at India’s Net Zero roadmap holistically across industries. It’s a great time to interface with them.
Mridula Ramesh: What about medical waste? I haven’t seen a company managing medical waste except through incineration.
Anjali Bansal: I haven’t looked into it, so I don’t know enough. What I do know is that next-generation materials being created and innovated might lead to less waste.
Mridula Ramesh: When you invest, what is the TRL level that you consider?
Anjali Bansal: At Avaana, we invest in both product and process innovation. For deep tech, we look at TRL five plus, where there is proof in the lab and it is either already commercial or ready to be fully commercialised. Now, there are more of us willing to take the risk. TRL three to five is where the gap lies. There’s some phenomenal work happening not only in India but around the world on next-generation materials or alternative materials for everything, including packaging, plastics, and medical applications. If someone creates a product, I’m sure it will get funded, provided it is commercially replicable and scalable.
Mridula Ramesh: What can be done to tap innovations lying hidden in many academic institutions?
Anjali Bansal: At funds like Avaana, we work across the board, with incubators and universities in India and overseas, recognising that some of our solutions don’t need to be novel; they need to be applied and scalable. We should have people who do core research for which there is no application today but will be one tomorrow, leading to multiple commercial opportunities. We have enough success stories in India. It is easy to say that the university system needs to do a better job—and sure, it does—but ultimately, if there is opportunity, there will be entrepreneurs.
Mridula Ramesh: There are people working on taking both MLP and single-use plastics back into the chain, converting them into polyol films, not just glass. They are actually reintegrating them directly into the process itself, rather than downcycling.
To sum up, the time to act is now. Solid waste is a serious problem. Until everyone perceives it as such, consumer demand won’t materialise. Policies may exist, but they may not be implemented. We need inclusivity. We must collaborate with cooperatives owned by waste workers or green workers. There are ownership models where they can participate in the economic value creation of this sector, but it will require similar interventions to those seen in cooperative farming and microfinance. Those models exist; we have to think about replicating and adapting them to this largely unorganized and informal space.
