The Neev II Fund, launched by SBI Ventures Limited in 2021, is an SME-focused private equity fund investing in climate-tech and environmental solutions across India. Building on its predecessor, Neev I, the fund targets high-growth SMEs delivering clean energy, circular economy, sustainable agriculture, and decarbonisation technologies. Neev II provides significant minority equity stakes, combining financial support with strategic guidance, ESG integration, and operational assistance. A robust impact monitoring system tracks economic, environmental, and social outcomes using international standards.
SBI Ventures Limited – Neev II Fund in India
Abstract
In June 2021, SBI Ventures Limited (formerly known as SBICAP Ventures Limited) – a subsidiary of the State Bank of India (SBI) – launched the Neev II Fund as a successor fund of the earlier Neev I Fund. The Neev I Fund was initially created as a joint initiative between the State Bank of India and the UK Government, and it was focused on investing in physical and social infrastructure in eight low-income Indian states. Building upon this, the Neev II Fund was developed with the involvement of the following institutional partners:
State Bank of India (SBI)
European Investment Bank (EIB)
Foreign, Commonwealth & Development Office, Govt. of UK (FCDO)
Japan International Cooperation Agency (JICA)
Small Industries Development Bank of India (SIDBI)
Self-Reliant India (SRI) Fund
Neev II is an SME focused private equity fund investing in innovative solutions in areas, such as clean energy technologies, electric vehicles, the efficient utilisation of raw materials & water resources, and circular economy initiatives, across India. The total capital allocated to the fund amounts to c.INR 10 billion (around USD 120 million and EUR 102,5 million).1
Equity investments are made directly into companies, typically between EUR 5 to 20 million, with the fund taking significant minority stakes. These positions provide rights to commercial and non-commercial information, board representation, and structured sustainability reporting (including GHG metrics and gender inclusion indicators). Reporting is required quarterly and annually, supported by an externally assessed impact report. Non-financial support includes technical assistance on a case-by-case basis through limited partners, facilitation of international linkages (e.g. Japan, UK & EU market access), and contribution to sector-level policy work, meaning that the fund engages with government bodies and regulators to help shape enabling policies, build investor confidence and mobilise additional capital into emerging climate sectors in India.
The overarching goal of Neev II is to scale up SMEs that are delivering transformative climate-tech and environmental solutions. The fund specifically concentrates on sectors that are vital to the transition toward a sustainable and low-carbon economy, including clean energy production, decarbonisation of industrial processes, sustainable agricultural practices, and circular business models2 where advanced technology can be deployed for solving real world problems. The fund has a focus on companies with high potential in their growth phase, i.e. with already an orderbook and a technology that has proven its worth but needs capital for deployment at scale.
India’s SME sector is recognised as one of the most significant generators of employment and economic growth. It holds the potential to create extensive positive impact to the whole of society, such as improved standards of living, enhanced livelihoods, and broader access to clean energy across diverse and underserved communities. Neev II is designed to channel investments into SMEs that are actively working to mitigate and build resilience against environmental and climate-related risks. These businesses also play a crucial role in enabling India to meet its 2050 targets for reducing greenhouse gas emissions. As India works towards fulfilling its NDCs, the SMEs' environment is expected to be central to achieving these climate commitments due to its close integration with local ecosystems and community needs.
The fund seeks to close the private equity financing gap that hinders progress toward climate resilience and emissions reduction in the SME sector. Beyond traditional impact investment approaches, Neev II is also committed to advancing policy actions that maximise impact potential. It adopts a hands-on engagement strategy providing strategic and operational support to the companies investing in the fund: this includes assistance in navigating regulatory requirements, accessing finance, and strengthening organisational capacity and governance.
Strategic Repositioning to Address Market Gaps: Neev II evolved from Neev I by shifting its focus from infrastructure to a broader set of climate-tech sectors. This thematic shift was driven by a recognition that India’s climate-tech ecosystem lacked adequate growth capital—an area traditionally underserved by private and conventional financing instruments. By targeting this gap, Neev II positioned itself to address a clear market failure. Additionally, geographical restrictions present in the first iteration were removed to enable a broader reach across India.
Strengthened ESG Risk Management: Neev II established a comprehensive Environmental, Social, and Governance (ESG) framework, including the development of an Environmental and Social Management System (ESMS) with support from its Limited Partners (LPs). The ESMS outlines procedures for identifying, assessing, and mitigating environmental and social risks across the portfolio, ensuring responsible investment practices are embedded in fund operations.
Rigorous Due Diligence and Quality Control. All applicants undergo a thorough due diligence process conducted by external consultants, evaluating value chains, management capacity, and sectoral dynamics. This ensures high-quality investments that can deliver financial returns alongside social and environmental benefits. However, a key challenge has been the high volume of ineligible or non-climate-aligned applications. Combined with the Fund’s rigorous screening criteria, this results in a low application success rate—approximately 1 in every 60 to 70.
Comprehensive Impact Measurement Framework. The Fund employs a robust impact monitoring system that incorporates international frameworks, including3:
Sustainable Development Goals (SDGs)
Greenhouse Gas Protocol
IRIS+
Performance is tracked across three core dimensions: economic, environmental, and social. This integrated approach enables the Fund to simultaneously address multiple development and climate priorities.
Strong Branding and ESG Integration: Neev II benefits from the established reputation of its predecessor, which successfully raised capital from institutional investors and supported portfolio companies in doing the same. It is now a recognised brand in India with a strong ESG identity. ESG principles are embedded across the fund’s lifecycle4., with structured action plans developed during due diligence and monitored through follow-ups (6–18 months post-investment). This integration has led to improved sustainability performance across portfolio companies.
Value-Added Support Beyond Capital: The Fund offers ancillary services to its portfolio companies, including advisory support, capacity building, and assistance with governance and ESG reporting5.. This complementary non-financial support helps companies address weaknesses identified during due diligence, strengthening their operational and impact performance.
Demonstrated Impact on Jobs, Climate, and Access: According to the 2024 Neev II Impact Report6, the fund has achieved substantial outcomes:
3,500+ jobs created
65,000 people gained access to clean-energy transportation
56,000 people gained access to clean energy
2.3 million people benefitted from improved air quality
1.1 million tonnes of legacy waste managed
0.22 million tonnes of CO₂ emissions avoided/reduced
The fund’s strategy explicitly targets green job creation, gender equality, climate change mitigation, and inclusive growth, with a strong emphasis on last-mile impact in underserved communities.
Catalytic Capital and Market Signaling: Neev II plays a catalytic role by investing early in emerging climate sectors, such as green hydrogen, helping to de-risk these markets and stimulate broader investor interest. By facilitating follow-on investments and taking early-stage equity stakes, the fund creates demonstration effects that help attract commercial banks and institutional investors. Its involvement serves as a market signal—increasing confidence among future lenders and reducing their perceived risk.
Leverage and Financial Return Potential: Equity investments have proven effective: for every euro invested from Neev I, €3–€4 were mobilised from other sources. Although exit timelines were delayed due to the COVID-19 pandemic, successful exits are now occurring, particularly through strategic secondary stakes and company buybacks. This demonstrates the potential for commercial returns alongside environmental and social impact.
Strategic Minority Stakeholding for Influence: The fund typically takes a significant minority stake, allowing it to influence strategic decisions within portfolio companies without assuming full control. This structure enables the fund to steer companies toward sustainable growth and sound governance practices while remaining attractive to private co-investors.
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← 2. SBI Ventures (2024) NEEV II IMPACT REPORT. Retrieved from: https://sbiventures.co.in/wp-content/uploads/2025/04/Neev-Fund-II_Impact-Report-FY24.pdf
← 3. SBI Ventures (2024) NEEV II IMPACT REPORT. Retrieved from: https://sbiventures.co.in/wp-content/uploads/2025/04/Neev-Fund-II_Impact-Report-FY24.pdf
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