U.S. and Indian VCs Launch $1 Billion+ Alliance to Fuel IndiaS Deep Tech Sector
NEW DELHI – A new alliance of U.S. and Indian venture capital firms has committed over $1 billion to invest in India‘s burgeoning deep tech startup ecosystem. The initiative, announced today, aims to provide crucial funding and a unified voice for the private sector as it navigates the rapidly evolving Indian regulatory landscape.
the alliance, spearheaded by Lightspeed venture Partners’ Hemant Vishwanathan after discussions with industry stakeholders and the Indian government, will focus on early-stage companies – from seed funding through Series B rounds – and deliberately avoid late-stage investments.Vishwanathan emphasized the long-term vision, stating, “We have put this thing together to actually energize the ecosystem and bring like-minded investors together,” and adding that the billion-dollar commitment “is just the beginning…any long journey starts with the first step.”
Participating firms anticipate further expansion of the alliance, with expectations of both additional financial VC firms, private equity firms, and corporate investors joining the effort.
To participate, firms must adhere to the conditions set forth under the Indian government’s Research and Growth Initiative (RDI) scheme. This includes investing in “sunrise” sectors, backing India-domiciled startups, and securing necessary local regulatory approvals. Vishwanathan clarified the alliance’s role, stating, “the alliance is just a platform for engaging with the government.”
The formation of the alliance comes after instances of regulatory changes in India, implemented without sufficient industry consultation, have caused disruption. Recent examples include a prior requirement for government approval for AI model launches, and the now-scrapped “angel tax,” both of which faced significant criticism and were ultimately reversed following widespread concern.The alliance intends to proactively engage with the Indian government on policy and incentives, acting as a unified voice for the private sector.
Members will voluntarily share information and coordinate on pipeline development, due diligence, and co-investment opportunities. An advisory committee, currently comprised of representatives from Accel, Premji Invest, and Venture Catalysts, will establish shared objectives and ensure coordination while maintaining the independence of each individual fund. Accel partner Anand Daniel will serve as the inaugural chair, with leadership rotating in the future, according to Kumar.
While the alliance promises increased access to long-term capital and a stronger voice for the industry, some caution that coordination failures coudl leave promising startups unsupported.”Over the next decade, startups will build in India and export breakthrough solutions to the world. The tailwinds are in place: ambition, talent, policy intent, and patient capital,” stated Anand Daniel in a prepared statement.