BENGALURU: Though the country's start-up ecosystem is also focusing on deeptech (more into innovation), the overall funding in the late-stage has come down drastically in the last few years. According to data sourced by market intelligence firm Tracxn, late-stage funding saw a decline of 69% from $166 million in 2023 to $52 million in 2024. In 2022, the total funding stood at $1.8 billion.
Last week, Commerce Minister Piyush Goyal urged start-ups to focus more on innovation. He had pointed out that many start-ups are focusing on food delivery, whereas, Chinese start-ups are working on EVs, semiconductors and AI.
The country has over 3,600 deeptech start-ups. Though late-stage funding in deeptech start-ups has declined, seed stage funding stood at $291.9 million in 2024 compared to $218.6 million in 2023. Early-stage funding also witnessed a slight increase at $652.7 million in 2024 compared to $651.4 million in the previous year.
Narendra Bhandari, General Partner, Seafund said there is a need for start-ups in India which are focussed at making us self-reliant in key sectors like semiconductors, energy, robotics and transport, among others. "The opportunity and talent in India are immense. The spotlight on deep tech start-ups is critical," he said.
Manu Iyer, general partner, Bluehill.VC opines that while India produces a lot of engineers, there are few opportunities for local talent to work in deeptech. "Even fewer pursue masters level programs in semiconductors, materials, quantum and end up going to the US to pursue such programs," he added.
According to him, the government has to encourage start-ups and innovators building hard technology with support.
"Investors have largely shied away from investing in deep-tech mostly worried about the long gestation cycles associated with commercialization of deep-tech. However, successful outcomes in deeptech from companies like Ather, Atomberg, Ideaforge, Uniphore amongst others has meant that capital is now more confident in being deployed into these sectors," he added.
The overall capital deployed into R&D by both the private sector and the government has been miniscule. India’s R&D spend as a percentage of GDP has been quite small and has stayed constant and below 0.7% for 2023. Comparatively the same number for China is 2.5% and the US is 3.5%, with Israel leading the pack at 5.4%, Iyer added.
