Venture capitalists say deeptech funding in India will remain in the $1-1.5 billion range over the next two years, before picking up in 2027-28, driven by policy support, the launch of the Research Development Incentive fund and a stronger pipeline of startups beginning to reach maturity. Some are also betting on growing interest from Indian family offices, global funds and limited partner interest in the sector.
In 2025, early-stage rounds accounted for more than half of the total funding at $850 million, up from $690 million in 2024, with investors looking to back startups that can commercialise their technologies. However, initial cheques dipped to $277.4 million from $332.9 million last year.
ETtech“While it’s good that we celebrate milestones and announcements, if you look at the absolute numbers, deeptech funding is still relatively anaemic–though it is improving,” said Sateesh Andra, managing director, Endiya Partners.
The early-stage venture capital firm, which is currently investing from its $100 million Fund III, remains focused on enterprise, frontier tech, healthcare and industrial technology.
Murali Krishna Gunturu, a founding member of Inflexor Ventures, which is looking to close its $150 million Fund III, said early-stage innovation will continue to drive deal flow in 2026. “The most visible shift will likely be an increase in scale-up rounds as more companies mature beyond early pilots,” he said.
Semiconductors and spacetech emerge winners
Within deeptech, subsectors such as semiconductors, defence-tech, quantum and spacetech continue to attract capital, while others including energy storage, battery technologies, artificial intelligence (AI)-led infrastructure, biotech, drones and smart manufacturing are seeing investors reassess risk and long gestation periods.
Semiconductor and chip-design startups emerged as the strongest performers in 2025, raising $191.1 million so far, compared with $41.4 million in 2024 and $71.8 million in 2023. This shift aligns with government incentives, geopolitical supply-chain disruptions and India’s push to build a domestic semiconductor ecosystem.
Spacetech funding has also held up, with startups raising $93.7 million since the start of 2025, compared with $68.9 million in 2024 and $139.2 million in 2023. Digantara’s recent $50 million round, Agnikul’s $17 million fundraising and several other startups currently in talks to raise growth capital will help sustain investor interest, said VCs.
Manu Iyer, managing founder of deeptech fund Bluehill VC, said that advances in communication technologies are emerging as a key focus within spacetech. “High-capacity satellite downlinks, combining advanced RF with laser systems and electronic warfare is becoming interesting,” he said, adding that the sector’s growth is driven more by global use cases than domestic timelines, allowing faster commercial traction.
Most deeptech ventures funds said they are evaluating more spacetech and semiconductor startups and plan to write initial cheques and participate in follow-on rounds in 2026.
Speciale Invest, which recently announced a Rs 1,400 crore early growth-stage fund, said year-on-year funding numbers can be misleading in deeptech. “The capital stack is improving, and the foundation is just getting built,” said managing director Vishesh Rajaram.
From a deeptech lens, there are probably no more than 300 true deeptech companies in India today, an investor said on condition of anonymity, adding, “Among these, fewer than 30 have raised more than $10 million so far. That shows how thin the growth capital layer has been until now.”
Long road ahead for startups
Deeptech founders said fundraising has become more focused, with specialised deeptech funds and greater patience in the system. However, they pointed out that access to specialised talent, infrastructure costs and expectation management remain key challenges.
Shashwath TR, cofounder of semiconductor startup Mindgrove Technologies, said investors are increasingly recognising that hardware-heavy deeptech takes time. “Semiconductors, industrial AI and deeptech in general move slower and that’s okay, because the upside is significant,” he said.
Mindgrove Technologies is preparing for the commercial deployment of Secure IoT, a high-performance 28 nm microcontroller system on chip for smart devices.
Founders said that access to larger cheques becomes easier only once startups can clearly demonstrate where their first Rs 10-50 crore orders will come from. “It’s about balancing moonshots with sustainability. That’s where most space startups still need clarity,” said Anirudh Sharma, founder of Digantara.
“Capital helps companies build capabilities. The sector growth looks positive while some may not scale, but that creates merger and acquisition opportunities for companies,” he added.