In recent years, India’s startup ecosystem has evolved beyond traditional app development and IT services. Venture capitalists are now turning their attention to startups focused on hardware, artificial intelligence, robotics, and even space infrastructure. Deep tech, once considered a risky and niche area, is now garnering significant interest and investment.
At the Startup Mahakumbh 2025 event in New Delhi, Commerce Minister Piyush Goyal urged Indian startups to shift their focus from convenience apps like food delivery to deep-tech innovations such as AI and semiconductors. This call to action sparked a lively debate among investors. While some agreed with the need for ambition, others, like Kushal Bhagia of All In Capital, defended their existing investments in companies like PierSight and Bellatrix, emphasizing India’s global competitive edge.
Changing Landscape of Deep Tech
Narendra Bhandari, a partner at early-stage venture capital firm Seafund, stated, “There’s never enough tech investments. There’s never enough focus on deep tech.” Over the past decade, India’s approach to deep tech has transformed from a software services mindset to one that aspires to build foundational technologies. This shift has encouraged more experimentation and innovation.
India is witnessing the rise of startups in defense, computing, and space technologies. Bhandari highlighted the diverse range of sectors benefiting from technological advancements, saying, “There’s a spectrum of stuff that has come out from fintech, payment infrastructure, and tech for social and commerce. You see vertical after vertical in India being enabled by technology.”
Mindset Shift and Risk-Taking
Venture capitalists are not only funding innovation but also guiding founders, building connections, and assisting with technical challenges. Bhandari noted that a change in mindset has enabled this shift. He remarked, “Founders today don’t need to justify their career choices to parents and potential in-laws.”
Access to mentorship, government support, and capital has further strengthened this mindset shift. Angel investors are increasingly willing to take riskier and more technical bets, supporting startups with small amounts of capital.
AI as a Foundational Element
Vaas Bhaskar, a partner at Elevation Capital, emphasized that AI is becoming a foundational element, not just an add-on. He observed that younger startups are adopting lean, AI-native structures, allowing them to create products and serve customers with small teams. AI is now being integrated into various industries, including consumer brands.
Elevation Capital believes India’s strength lies not only in exporting talent but also in leveraging it domestically. Bhaskar remarked, “We now have the best talent in the country and have built a vibrant ecosystem for that talent.”
Emergence of Energy and Robotics
Energy, automation, and robotics are emerging as critical sectors for Seafund. India’s reliance on imports and shifting labor dynamics drive innovation in these areas. Bhandari noted, “Energy could mean batteries, EVs, and drones, because all of this, in some ways, helps with getting things done, with lower energy.”
In the automation sector, societal changes like urban migration are influencing innovation. Seafund has invested in companies like Genrobotics and is exploring opportunities in biotechnology and genomics.
Expanding Frontiers with Satellites and Chips
Seafund’s portfolio illustrates deep tech’s expansion across industries. In space tech, startups like TakeMe2Space are addressing the demand for global satellite communication. Bhandari explained, “The number of satellites across the world is gonna grow significantly because we all need to communicate all the time.”
In compute infrastructure, Seafund is backing Calligo Tech, which develops semiconductor solutions to reduce power consumption during data processing. This is crucial as AI demand strains computing capacity.
In health tech, Consint.ai employs forensic AI to detect fraud in insurance claims, enhancing efficiency and accuracy.
Investor Priorities
Seafund and Elevation prioritize problem clarity, founder mindset, and customer obsession when evaluating deep-tech startups. Bhandari emphasized understanding the problem being solved and assessing the team’s capability. A technical background within the fund helps investors accelerate conversations with startups and provide ongoing support.
Elevation, with investments in companies like Meesho, Swiggy, and Paytm, focuses on customer obsession. Bhaskar stated, “It’s customer obsession. They just think about every customer backwards, and are very obsessed with the customer pain point.”
India’s Deep-Tech Opportunity
Government support has improved, with initiatives like the Design Linked Incentive (DLI) program helping startups reduce costs and bring products to market. Bhandari noted, “You are able to experiment. If you deliver, you get paid back. It’s a great start.”
However, he stressed that India has a long way to go. “We need more of it, a lot more of it,” he said. “We need to continuously invest at a private level and at a government level.”
Venture capitalists agree that India has an opportunity to lead in deep tech but must act swiftly. Bhaskar highlighted two key trends: building software for Indian markets like SMBs and healthcare, and expanding access.
Ultimately, the question is whether India will capitalize on its deep-tech potential quickly enough.
Note: This article is inspired by content from https://analyticsindiamag.com/deep-tech/indian-vcs-want-to-invest-in-deep-tech-startups-despite-govt-skepticism/. It has been rephrased for originality. Images are credited to the original source.