Ashish Ranjan, director at Kotak Alternate Asset Managers, said the biggest frustration for deeptech startups comes from regulators. “We have companies that waited nearly two years just to get papers moved within government institutions. In some cases, regulators themselves didn’t know how to process a first-in-class application,” he added while speaking at a panel discussion on Tuesday in Bengaluru.
While investors during the discussion hosted by Ankur Capital’s Deep Science Forum acknowledged government funding and schemes, they said the money often arrives too late to be useful. Manish Singhal, founding partner at Pi Ventures, said, “The intent is good, and the money is there, but accessing it is painful.”
He added that some portfolio companies received grants nearly two years after applying, by which time they no longer needed the cheque.
Beyond regulatory bottlenecks, venture capitalists also highlighted structural gaps in India’s capital pool, especially for late-stage funding. Karthikeyan Madathil, partner at Yali Capital, said that while early-stage funding has improved with many new funds announced in the last two years, startups still rely heavily on foreign capital beyond Series B and later stages.
“What’s missing are large domestic funds that can back deeptech companies through multiple rounds and take them all the way to IPO,” Madathil said.
Fund managers also said that founders often seek Silicon Valley-style valuations without matching execution. “We often want Silicon Valley valuations, but we haven’t fully internalised Silicon Valley execution. Exposure to global capital forces founders to operate at that level, which is critical if they want to compete internationally,” Madathil said during the panel.
Manufacturing remains an overlooked opportunity
Investors say India has an opportunity to leapfrog legacy systems and focus on advanced manufacturing and semiconductors, but warn that capital intensity and long gestation periods make patient funding the need of the hour.
Rishabh Bardia, vice president at Premji Invest, added that large ticket sizes of long-term capital are beginning to look at the domain more seriously. “If we can build conviction early around a founder, a problem, and the technology, we can step in early and support companies through multiple stages,” he said, adding that Premji Invest is also backing early-stage funds to strengthen the pipeline.
Despite the challenges, VCs said the broader ecosystem growth remains positive, driven by scientific talent, growing global demand, and increased interest from both domestic and overseas. They added that India’s defence sector is also emerging as a critical early buyer for deeptech startups.