Bengaluru-based venture capital firm Transition VC has announced the launch of its second fund, targeting a substantial corpus of ₹1,500 crore, or approximately $155 million. This new fund will build upon the success of its predecessor by continuing to invest in the energy transition sector while expanding into industrial deeptech. The initiative underscores the growing investor confidence in India's engineering-led innovation and its potential to lead global decarbonization efforts.
Building on a Successful Foundation
Transition VC's first fund demonstrated remarkable performance, validating its specialized investment thesis. The fund, which closed at ₹723 crore, significantly surpassed its initial target of ₹400 crore and has been fully deployed. It delivered an impressive 57% internal rate of return and generated over a 3x multiple on invested capital within three years.
The inaugural fund backed 17 startups across cleantech sectors, including electric mobility, green hydrogen, and energy storage. The portfolio has achieved a notable record of zero write-offs, with several companies already reaching profitability and securing follow-on funding. Many of these firms are now scaling successfully, with some approaching annual revenues exceeding ₹100 crore.
Expanded Investment Horizon for Fund II
With its second fund, Transition VC plans to make larger investments, with cheque sizes ranging from $2 million to $5 million. The firm aims to build a portfolio of over 20 pioneering startups over the next four years. Deployments from the new fund are scheduled to commence in the third quarter of the 2027 fiscal year.
Fund II will maintain its core focus on the energy transition value chain while broadening its scope to include adjacent high-growth sectors. The firm will now actively invest in advanced manufacturing and application engineering to support India's industrial evolution. It will also selectively evaluate opportunities in emerging fields like semiconductors, nuclear energy, and next-generation energy infrastructure.
The firm will continue its strategy of targeting the "missing middle" of venture capital, a stage it identifies as critically underserved. This involves backing engineering-led startups that have established technical feasibility and gained early commercial traction. The goal is to help these promising companies navigate the challenging path to achieving product-market fit at scale.
A Strategic Vision for India's Industrial Future
According to Co-Founder Raiyaan Shingati, India is uniquely positioned to spearhead the global energy transition. He highlighted the nation's combination of a vast domestic market, world-class engineering talent, and cost-efficient manufacturing capabilities. This unique advantage allows for the development of breakthrough technologies that advance both energy sustainability and security.
Transition VC employs a strategic approach to portfolio construction, focusing on creating a complementary ecosystem rather than investing in competing businesses. This method is designed to foster powerful synergies through shared technical expertise and commercial partnerships among its portfolio companies. The collaborative model aims to accelerate innovation and market penetration across the industrial value chain.
The launch of Fund II has been met with strong support from the firm's existing investor base. Many limited partners from the first fund have renewed their commitments, with several increasing their allocations significantly. The fund is also attracting considerable interest from global institutions, corporate investors, and family offices focused on industrial technologies.
The launch of Transition VC's ₹1,500 crore second fund marks a significant milestone for India's deeptech and industrial sectors. It reflects a strong belief in the country's capacity to produce globally competitive engineering solutions for decarbonization and advanced manufacturing. This strategic capital infusion is poised to accelerate the growth of innovative startups, solidifying India's role in the future of global energy.