India’s deeptech boom puts growth investors to the test

🔗 원문 전체 보기 → Livemint

요약

Bigger rounds are attracting mainstream investors, but underwriting challenges are keeping growth capital cautious.

본문

This is a Mint Premium article gifted to you.
Subscribe to enjoy similar stories.

India’s deeptech startups are beginning to reach a stage that was largely out of bounds for traditional growth investors: they have established revenue streams, some evidence of unit economics and are starting to grow in a more stable way.

The shift is also showing up in larger cheques and a broader mix of investors entering the sector, according to industry experts, even as growth funds confront the difficulty of evaluating businesses with long development cycles and technical risks.

“Today there are more of these businesses that have established revenue streams, showing some unit economics, and are now starting to grow in a more stable way,” said Dushyant Singh, managing director at Playbook Partners, a sector-agnostic growth fund.

Playbook joined Skyroot Aerospace’s $60 million round, which made the company India’s first spacetech unicorn at a $1.1 billion valuation in May.

At least six of the top 10 deeptech deals so far this year were rounds of $30 million or more from private-equity and venture-capital investors, according to Venture Intelligence data.

Gaja wrote a roughly ₹95 crore (around $10 million) cheque in the $74 million second tranche of Sarvam’s $300 million Series B and is actively scouting for deeptech and artificial intelligence (AI) bets. Avataar Ventures led Ethereal Machines’ $29 million round, while Exponent Energy’s $21 million round was led by 360 ONE. The asset manager has raised a ₹1,500 crore fund to back defence, aerospace and frontier-tech companies.

Electric-vehicle manufacturer River Mobility raised $120 million in equity and debt from Elev8 Venture Partners, Claypond Capital and existing investors. It was the first time the company raised domestic capital.

But a large round does not necessarily mean a deeptech company has reached the growth stage.

Awkward middle

Last week, Airbound, an unmanned logistics and delivery drone startup, raised $37 million in a Series A led by Greenoaks, with participation from DoorDash, Physical Intelligence founder Lachy Groom, Lightspeed and Humba Ventures. Lightspeed’s India-specific fund was the only local participant.

Founder and chief executive Naman Pushp said Airbound began looking to outside investors only after exhausting all domestic options.

“We were just shuttered between the growth and early stage team,” he said of conversations with an Indian fund, which he declined to name. “Initially it was the growth team evaluating us because the round size is for the growth team. They realised that they cannot evaluate us via growth metrics, and moved us to their early-stage team. But for that team, which normally writes cheques for $10 million and below, writing a $30 million cheque hurts.”

Growth investors typically enter after a company has demonstrated product-market fit, a threshold that deeptech companies can struggle to meet because of their longer science-to-commercialization timelines.

“Given the significant investments being made in this domain in the US, the buzz and fear of missing out on this wave are much stronger,” said Rishabh Jain, director, digital, technology & consumer investment banking at Avendus Capital. “Funds that previously did not invest in deep tech are now spending more time evaluating the sector.”

Why now

Geopolitical tensions and supply-chain risks are adding to the appeal of homegrown technologies. Operation Sindoor, the conflict in West Asia and potential supply-chain shocks from abrupt Chinese restrictions on special technologies have led countries including India to place greater importance on developing domestic capabilities. This is strengthening the strategic case for sectors such as aerospace, defence, spacetech and semiconductors, particularly as the government deploys capital through mechanisms such as the ₹1 trillion Research, Development and Innovation (RDI) Fund.

But geopolitics is only part of the story.

“Don't forget that we're in the middle of a compute super-cycle as well,” said Debraj Banerjee, general partner at Fundamentum Frontier Advisors (F2A), a ₹3,000 crore deeptech and consumer AI-focused growth fund. “Homegrown technologies are seeing a sovereignty premium, which is why you're also seeing more growth funds looking to do deeptech.”

Deeptech companies have raised $2.3 billion across just under 200 deals so far this year, according to Tracxn, compared with $1.62 billion across 453 deals in all of 2025. The numbers point to larger rounds despite lower deal activity.

But greater investor interest has not yet translated into more deployments, which industry insiders say is still another six to 12 months away.

The lag stems from a lack of underwriting capabilities.

Underwriting gap

Banerjee of F2A said domestic investors are struggling with a mismatch in mental models.

“Some fund managers are finding it tough to switch over from the SaaS metric mindset to a deep tech mindset. That's the major hangover,” he said. “If you end up visualising a deep tech business like a SaaS business, then you'll never make those bets.”

Playbook’s $250 million maiden fund will allocate roughly 50% to frontier tech and AI-native businesses, including defence, precision manufacturing, healthcare and battery storage. But it still looks for risks it can underwrite.

“We are happy to underwrite risk along one vector,” Singh said. “If there are multiple directions of risk, that might cause us to say maybe come back later.”

That interest, however, has yet to translate into easier access to domestic growth capital.

During River Mobility’s $120 million raise, the company had reached advanced talks with A91 Partners, which pulled out at the last minute over concerns around viability and projected revenue growth, according to two people familiar with the matter.

Narayana Murthy’s family office, Catamaran Ventures, which has invested in deeptech outside India, most notably in SpaceX, confines itself to execution-led manufacturing bets in India and takes limited partner positions in venture funds backing deeptech.

“Growth stage, we will absolutely look at it directly, but not many IP-oriented deep tech firms have still reached that growth stage,” said Deepak Padaki, president of the fund.

About the Author

Rwit is a correspondent at Mint covering India’s burgeoning startup ecosystem and the venture capital and private equity firms that back them. Sitting out of Bengaluru, he writes on the new-age tech businesses that the city and the rest of the country seems to continuously be birthing.<br><br> While Rwit’s interests lie in covering the new wave of deeptech, AI, SaaS and consumer tech businesses, he’ll write on consumer brands and fintech (if someone repeatedly explains these sectors to him).<br><br> When he’s not scrolling through the Indian startup forums on Reddit, Rwit is usually trying to figure out early signs of what’s to come next in the ecosystem. As a result, he’s been early to spot trends like VCs becoming more active in backing deeptech, funding bottlenecks for agentic AI startups and a potential revival in edtech through AI. <br><br>Prior to his ongoing stint at Mint, Rwit worked at NDTV Profit as a social media producer while also working on his own stories for the TV channel after he graduated from the Asian College of Journalism in Chennai. <br><br>When he’s not working on stories, he can be found trying to figure out where he should go to eat next in Bengaluru, or what his next tattoo should look like. If you see him in the wild, you should ask him how he pronounces his name. He’s definitely not tired of being asked about it.

Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

Topics

• #startups
• #Startup Funding