India’s Deeptech Sector Soars: A New Era of Innovation
Mumbai — May 9, 2024 — india’s deeptech sector is booming, with a surge in funding and a growing number of startups. The sector witnessed considerable growth in 2023, with the addition of over 480 new ventures. This rapid expansion is driven by innovative companies and supportive governmental policies. Industry experts believe that this trend will continue, signaling a promising future for indian innovation. For more on the key drivers and future challenges, read on.
India’s Deeptech Sector Soars: A New Era of Innovation
Deeptech’s Explosive Growth
India’s deeptech ecosystem, encompassing startups in artificial intelligence (AI), spacetech, advanced manufacturing, adn semiconductor design, experienced remarkable growth in 2023. The sector witnessed the addition of over 480 new ventures, doubling the number from the previous year. This surge brings the total number of deeptech companies in India close to 4,000.
Funding Surge in 2024
The momentum continued into 2024, with deeptech investments skyrocketing by 78% compared to the previous year. A report by Nasscom and Zinnov attributes this expansion to supportive government policies, rapid advancements in generative AI, and breakthrough innovations from emerging companies.
The top 10 deeptech startup funding rounds in 2024 accounted for approximately $600 million of the total $1.6 billion in deeptech funding. Notably, all but one of these top 10 were AI-powered software platforms addressing diverse use cases.
Investor Confidence and Ticket Sizes
Deeptech startups are not only attracting more funding but also commanding higher investor confidence. Median ticket sizes for deeptech investments are now matching or surpassing those of traditional tech startups, signaling a shift in investor sentiment.
Challenges and Concerns
Despite the impressive growth, founders and investors caution that India risks squandering this momentum if the ecosystem does not mature beyond early-stage support. Key areas needing advancement include building robust demand, ensuring capital continuity, and establishing meaningful exit pathways.
The best way to ensure Rs 10,000 crore reaches the right builders is to ally with the right venture capital funds who have a good track record.
Kaushik Mudda, cofounder of Ethereal Machines
Kaushik Mudda, cofounder of Ethereal Machines, a Bengaluru-based startup specializing in CNC machines for precision manufacturing, emphasizes the importance of aligning with venture capital funds that possess a proven track record. He notes that many funds tend to rely on market reports and Western models rather than deeply understanding the underlying technologies.
Policy pivot and Capital Needs
Mr. Mudda views the government’s current push as a real policy pivot,
signaling a long-term national ambition.However, he points out a fundamental challenge for deeptech startups: revenue often comes after years of R&D, and capital needs are front-loaded.
We’ve managed by being extremely frugal,
mudda saeid. Now I see a lot more startups having benefit of raising larger rounds in deeptech, I hope funds are then used wisely before revenue kicks in.
Domestic Market Depth
Some founders argue that the lack of domestic market depth is a significant bottleneck. Saurabh Chandra, founder of Ati motors, a startup building autonomous industrial vehicles, believes that the absence of a strong domestic market increases capital requirements, as global markets become the only viable option.
This is the route we have also taken,
he said.
