India’s startup ecosystem has seen a significant shift in venture capital funding towards deeptech sectors in recent months. This change comes as investors recognize the importance of supporting innovation in areas like artificial intelligence and semiconductor manufacturing. According to data from Venture Intelligence, 24 deeptech startups raised around $169 million between January and March this year.
This is a notable increase from the same period in 2024, when 17 startups raised $107 million. Ashish Taneja, Founding Partner and CEO at growX Ventures, explains that his firm strategically allocates risk capital to maximize the tenure of their investments. He believes that many deeptech products can be commercialized within three to five years, contrary to the common belief that it takes eight to ten years.
Kanika Mayar, Partner at Vertex Ventures SEA & India, emphasizes the importance of building products in India that are globally acceptable, as the domestic market for deeptech is relatively small.
Investors prioritize deeptech funding trends
The Indian deeptech ecosystem is still in its early stages, with few significant outcomes so far.
Arpit Agarwal, Partner at Blume Ventures, sees this as a measure of where the country is in its evolution. Despite the longer timelines for achieving product-market fit and revenue realization, venture capitalists view deeptech as a high-risk, high-return segment. Arjun Rao, Partner at Speciale Invest, notes that complex, cutting-edge products often have high market demand, leading to rapid revenue uptake.
Currently, most of the funding in the deeptech ecosystem is concentrated at the seed and Series A levels. However, startups at pre- or early-commercialization stages still face challenges in raising subsequent funding rounds, indicating a gap in the ecosystem. As the deeptech landscape matures, both startups and investors are adapting their strategies to address the unique challenges and opportunities in this sector.
With a focus on long-term success and global competitiveness, the Indian startup ecosystem is poised for growth in this critical area.
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