A profound transformation is reshaping India’s venture capital landscape, steering it towards the long-term, high-stakes realm of deep technology. For years, the nation’s startup ecosystem, fueled by a preference for rapid scalability and predictable returns, largely overlooked ventures rooted in advanced engineering, materials science, and fundamental scientific breakthroughs. This paradigm is now shifting, driven by a confluence of evolving investor mindsets, robust governmental support, and a maturing innovation infrastructure, positioning India to carve out a significant niche in the global deep-tech arena.
The journey for deep-tech pioneers in India has historically been arduous. Nearly a decade ago, Pranav Vempati, founder of Hyderabad-based Makers Hive, found conventional venture capital doors largely closed to his vision of creating sophisticated, technology-powered prosthetic hands. The inherent five-year product development cycle, a characteristic of deep-tech, proved an insurmountable barrier for investors seeking quicker returns. Vempati ultimately secured support from strategic angel investors and medical professionals who grasped the complexity and the profound societal impact of his work. This narrative is not unique; Vinayak Tsalla, CEO of seven-year-old Tsalla Aerospace, developing sustainable military and industrial-grade products, recounts similar early rejections, with investors deeming their innovations "too early, too slow, or too complex." Many deep-tech startups from that era, like Subtl.ai and Log9 Materials, succumbed to the protracted development cycles and acute capital scarcity.
The traditional Indian VC model, optimized for consumer internet, fintech, and Software-as-a-Service (SaaS) ventures, thrived on rapid customer acquisition and scalable monetization. Data from Bain and Co.’s 2025 venture capital report highlights this imbalance: in 2024, consumer tech alone attracted $5.4 billion, while SaaS and generative AI secured around $1.7 billion, together accounting for over 60-70% of total VC investment value. Total funding stood at approximately $14 billion that year. In 2025, out of $9 billion in total VC investment, consumer and SaaS still claimed about 50% ($4.3 billion), whereas deep-tech garnered a comparatively modest $1.15 billion, up from $843 million in 2024, according to Tracxn. This historical disparity underscores the fundamental mismatch between deep-tech’s long gestation periods and venture capital’s typical three-to-five-year exit horizons. Indeed, Tracxn data reveals that only 24 VC firms in India had invested in ten or more deep-tech startups over the preceding five years, signifying a limited specialist ecosystem.
However, the tide is turning with increasing momentum. Recent months have witnessed a surge in dedicated deep-tech initiatives. Firms like Lightspeed have intensified their focus on India-built deep-tech, Speciale Invest has announced a substantial ₹1,400 crore fund, Shastra VC has launched a deep-tech fellowship, and IIT Bombay’s SINE has debuted India’s first incubator-linked deep-tech VC fund. BYT Capital also entered the fray with its ₹180 crore maiden fund. This concerted private sector interest is amplified by robust government intervention. In a landmark move, Commerce Minister Piyush Goyal unveiled a ₹10,000 crore "fund of funds" for deep-tech in April, with ₹2,000 crore specifically allocated to bridge the critical "lab-to-market" transition gap.
This newfound enthusiasm is not accidental; it is a strategic imperative shaped by both domestic policy and global dynamics. The Indian government has proactively de-risked early-stage innovation, particularly in sectors deemed strategically vital for national security and economic sovereignty, such as defense, space, semiconductors, climate technologies, and advanced manufacturing. Public capital is now filling the void where private investors historically hesitated, supporting research and prototyping stages characterized by high technical risk and extended timelines. Initiatives like Startup India, Innovations for Defence Excellence (iDEX), the Indian National Space Promotion and Authorization Centre (IN-SPACe), and the Research, Development and Innovation (RDI) Scheme from Union Budget 2024 are specifically designed to accelerate the journey from scientific discovery to commercial deployment. Sadhika Agarwal, who leads investments at Equirus InnovateX Fund, emphasizes that "Deep tech by nature requires blended capital, patient venture funding alongside catalytic public support." This echoes successful models seen in renewables and solar, where government procurement and subsidies created predictable demand, ultimately attracting private capital and fostering global leaders, as noted by Avijeet Alagathi, managing partner at Shastra VC. The Production-Linked Incentive (PLI) schemes in electronics manufacturing provide a more recent parallel, demonstrating how policy can galvanize private investment.
The geopolitical landscape further reinforces this inward focus. Global supply-chain disruptions, exacerbated by events like the COVID-19 pandemic and rising international tensions, have underscored the critical need for indigenous capabilities in core technologies. Vishesh Rajaram, co-founder and managing partner at Speciale Invest, highlights how this environment has pushed capital towards areas aligned with national priorities, such as quantum security and drones, fostering a "look inward" mentality. This pursuit of technological self-reliance, or ‘Atmanirbhar Bharat’, is a powerful economic driver, promising to reduce import dependencies, create high-skill jobs, and elevate India’s position in the global innovation hierarchy.
Compounding this shift is the evolving talent dynamic. A growing number of founders are emerging directly from India’s premier research institutions, while Indian-origin scientists and engineers with invaluable global experience are increasingly returning home to establish companies. Rajaram notes that "the idea that serious technology can come out of Indian academia has been well established in the last five to seven years," citing faculty-led successes from institutions like the IITs. This burgeoning intellectual capital, combined with an improving domestic manufacturing ecosystem, has significantly eased supply-chain constraints. As Pranav Vempati observes, "Across batteries, tooling, machining and 3D printing, ecosystem support has grown significantly," reducing component costs and improving quality control. Amit Chand, founder of BYT Capital, encapsulates this synergy: "Policy support, market demand, maturing research institutions and returning talent are aligning for the first time," fundamentally altering how investors perceive risk in deep-tech.
The investment community is, in turn, forging a new playbook for deep-tech, one that acknowledges its inherent differences from conventional tech startups. Vishesh Rajaram argues for abandoning the notion of a standardized approach, asserting that "each sector operates very differently and each has distinct go-to-market paths, regulatory timelines and capital needs." Investors are now accepting longer exit timelines, structuring milestones around technical validation and real-world deployments rather than immediate revenue, and collaborating more closely with governments, strategic customers, and large corporates to facilitate market entry. Sunil Gupta, CEO of QNu Labs, notes the shift from a universal demand for "scalable SaaS models" to a more nuanced appreciation for complex, hardware-heavy, or government-linked businesses.
This adaptation extends to fund structures themselves. According to Equirus’s Agarwal, deep-tech-focused investors are redesigning fund tenures, deployment schedules, and follow-on strategies. "Longer tenures and extended harvesting periods are becoming the norm," she states, often supported by limited partners (LPs) who are more comfortable with patient capital, partly due to the increasing success of tech IPOs in India and globally. For instance, some VC firms are allocating as much as 50% of their total corpus for follow-on investments in deep-tech. Jamwant Ventures, specializing in defense and strategic technologies, maintains large follow-on reserves and accelerates write-offs to reallocate capital quickly to promising ventures, emphasizing that "Deep tech needs faster iteration and longer conviction," as articulated by its founder, Cdr Navneet Kaushik. Liquidity, traditionally a weak link for deep-tech, is also being addressed creatively through co-investment models involving strategic corporate investors and mission-aligned LPs. Yali Capital’s maiden deep-tech fund, for example, successfully attracted corporate and institutional LPs like Infosys, Tata AIG General Insurance, Qualcomm Ventures, and the Self-Reliant India (SRI) Fund.
Globally, deep-tech has demonstrated its immense value, resetting expectations for patience and returns. Padmaja Ruparel, co-founder of IAN Group, points to sectors like semiconductors, space, and life sciences where meaningful results often take a decade or more but deliver disproportionate value upon maturity. A Praxis Global Alliance report indicates a nearly six-fold increase in global deep-tech unicorn exits between 2018 and 2022, with notable examples including Google’s acquisition of cloud security leader Wiz for $32 billion, Marvell Technology acquiring Celestial AI for approximately $3 billion, and CoreWeave’s $23 billion public listing in 2025. These global successes provide a powerful validation for the long-term potential of deep-tech.
Despite these encouraging developments, significant challenges persist, particularly concerning the "valley of death" – the critical phase between technology readiness levels (TRL) 4 and 7. While early-stage (pre-seed) funding has improved, capital thins out dramatically at Seed and Series A/B rounds, especially for companies building truly original technology rather than service-oriented solutions. This is where startups need the most capital to transition from proven lab prototypes to commercially viable, industrial-scale products. Costs escalate sharply for testing, certification, manufacturing, and real-world deployment, even as revenue remains uncertain.
Some investors, like Equirus’s Agarwal, foresee this gap narrowing in the next 12-18 months, with an anticipated rise in stage-agnostic and growth-focused deep-tech funds targeting later rounds. Madhur Singhal, managing partner at Praxis Global Alliance, suggests that while "some green shoots have started to emerge already," it will take around 18 months for the growth-stage funding flow in deep-tech to pick up credibly. Even then, market adoption and gaining credibility for homegrown deep-tech solutions will remain challenging for several years. Compared to the US and China, India’s share of global deep-tech investment remains relatively small, underscoring the need for sustained effort.
As Vishesh Rajaram aptly puts it, "Deep-tech doesn’t change to fit venture capital. Venture capital has to adapt and learn." The ultimate test for this new wave of capital will be its patience and resolve to support startups through the formidable "valley of death." Deep-tech does not fail fast; it fails expensively and slowly. But as Tsalla concludes, when it works, the payoff is undeniably massive, offering not just financial returns but also national strategic advantage and profound societal impact. India’s deep-tech revolution is underway, demanding unwavering commitment and a fundamentally re-calibrated investment philosophy to realize its full, transformative potential.
