Deep tech is increasingly connected to India’s national and regional sovereignty, and the way companies in this space are funded is changing.

The Indian cabinet earmarked Rs 1 lakh crore ($12 billion) earlier this year for a Research, Development, and Innovation Fund, then followed up this month with a call for “second-level fund managers”—entities such as alternative investment funds, development finance institutions, and non-banking financial companies.

All types of VCs recognise this is their new frontier. After all, the verticals of blitzscaled digital platforms, D2C, and consumer apps are things of the past, while artificial intelligence—the flavour of the season—carries too high a risk for most investors.

The result is deep-tech companies having their day in the sun, but with some caveats. Funding startups in this space means being in it for the long haul. Research and development take years, and Indian industry is notoriously gun shy when it comes to spending on R&D. Even if a new technology is developed by a deep-tech firm, commercialisation isn’t easy to solve. 

The Ken editor Seema Singh unpacks this new landscape for deep-tech firms in the latest edition of Make India Competitive Again, as read by Rachel Varghese.

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