The Rise of Deeptech Startups in India: How Deeptech Funding is Shaping the Future of Innovation

  1. India’s Deeptech Ecosystem: Startups, Investments, and Strategic Growth

    The Indian deeptech ecosystem has emerged as a powerhouse of innovation, driven by advancements in artificial intelligence, semiconductor design, space technology, and robotics. Over the past three months, the sector has witnessed significant funding inflows, strategic government interventions, and breakthroughs in research commercialization. Startups are leveraging cutting-edge technologies to address both domestic and global challenges, supported by a gro wing network of venture capital firms and policy frameworks. This report examines the current state of deeptech in India, analyzing key sectors, investment trends, and the interplay between public and private stakeholders shaping the future of this dynamic landscape. Know More
  1. Key Sectors Driving Deeptech Innovation

    • Artificial Intelligence and Multi-Agent Systems
      AI startups are moving beyond conventional SaaS solutions to build core, infrastructure-level innovations. Alchemyst AI, for instance, is creating multi-agent systems that can embed into enterprise processes. Its AI system, Maya, is designed to act as a digital co-worker in sales development teams, automating complex tasks while enabling more coordinated workflows. Another rising player, Deceptive AI, is pushing the envelope on AGI with advanced capabilities in image synthesis and semantic segmentation, targeting use cases in fashion, media, and design. India’s AI sector is steadily evolving from end-user applications toward fundamental research and systems development with practical, cross-sector deployment potential.

    • Semiconductor and Hardware Innovation
      Hardware innovation in India is gaining ground. Mindgrove Technologies reached a key milestone by taping out a 28nm Secure-IoT chip earlier this year. Built using the open-source Shakti core from IIT Madras, this chip has applications in automotive electronics and consumer devices, offering a homegrown alternative to imported components. Government programs such as the Design Linked Incentive (DLI) are playing a critical role by supporting fabless startups and covering R&D costs. Meanwhile, Agnikul Cosmos has demonstrated engineering ingenuity by launching the first rocket powered by a single-piece 3D-printed engine—an achievement that speaks volumes about India’s growing stature in aerospace and additive manufacturing. Read More

    • Quantum Computing and Robotics
      Startups in quantum computing are beginning to explore solutions in optimization and cryptographic security, though most applications are still in the lab phase. Robotics, on the other hand, is seeing more immediate commercialization. Sedeman Mechatronics, a venture incubated at IIT Bombay, recently filed for an IPO to raise between ₹800–1,000 crore, aiming to scale its industrial automation systems. Its work in precision manufacturing is especially aligned with national goals like “Make in India” and the growing interest in dual-use technologies that can support both civilian and defense sectors. Explore
  1. Government Initiatives and Policy Support

    • ₹10,000 Crore Fund of Funds for Deeptech
      A major push came in April 2025 when Commerce Minister Piyush Goyal announced a ₹10,000 crore Fund of Funds to channel long-term capital into early-stage deeptech ventures. Administered by Small Industries Development Bank of India (SIDBI), the scheme focuses on startups working in AI, quantum computing, robotics, and biotech. The initial allocation of ₹2,000 crore is aimed at supporting ventures navigating the difficult transition from lab research to market readiness. This scheme adds to existing initiatives like the Indian Semiconductor Mission (ISM), which backs fabless innovation through grants and collaborative infrastructure.

    • Academic-Industry Collaboration
      Institutions such as IIT Madras and IIT Bombay continue to play an outsized role in pushing new ideas from research labs into commercial ecosystems. The Shakti processor project, which powered Mindgrove’s chip, is a prime example of academic innovation meeting market demand. The National Deep Tech Startup Policy (NDTSP) is also expected to ease IP licensing processes and promote closer ties between universities and startups. Over half of India’s deeptech ventures originate from academic environments, making these institutional linkages essential for sustained progress.
  1. Investment Trends and Venture Capital Activity

    • Surge in Early-Stage Funding
      Deeptech investments reached $324 million across 35 deals in the first four months of 2025, doubling from $156 million in the same period in 2024. Notable deals include:
      • Netradyne raised $90 million for its AI-driven fleet management platform.
      • SpotDraft secured $54 million to expand its AI-based contract management solutions.
      • Tonbo Imaging garnered $21 million for advanced thermal imaging systems used in defense and automotive sectors.

      Generalist funds like Peak XV Partners (formerly Sequoia India) and Blume Ventures are increasingly backing deeptech, diversifying from their traditional SaaS focus. Sector-specific funds like Seafund continue to lead early-stage rounds, with a portfolio emphasizing AI, IoT, and healthcare technologies.

    • Public Market Momentum
      The IPO pipeline reflects growing maturity, with MTAR Technologies and Tata Technologies emerging as top gainers in the deeptech sector, posting returns of 2.3% and 1.4%, respectively. Conversely, Olectra Greentech saw a 6.6% decline, highlighting volatility in clean-tech segments amid subsidy revisions.
  1. Seafund’s Role in Shaping the Future of Deeptech Startups in India

    Seafund, a Bengaluru-based venture capital firm, is at the forefront of supporting India’s deeptech revolution. With a Rs 250 crore Fund II, Seafund plans to invest in 18-20 deeptech startups by FY27, focusing on areas like AI SaaS, mobility, sustainability, semiconductors, and clean energy. 

    • Investment Strategy
      Seafund’s approach includes:
      • Early-Stage Focus: Investing from pre-seed to pre-Series A rounds, enabling startups to develop and refine their technologies.

      • Strategic Support: Providing mentorship, market access, and growth strategies to help startups scale effectively.

      • Sustainability Commitment: Allocating 20% of its corpus to clean energy and mobility startups, reflecting a commitment to sustainable innovation. 

    • Portfolio Highlights
      Seafund has already invested in several deeptech startups:
      • RedWings: Specializes in drone logistics, aiming to revolutionize delivery systems.

      • Docker Vision: Utilizes AI-driven computer imaging to enhance port operations by accelerating the mobility of shipping containers and assessing their conditions in real-time. 

      • Swapp Design: Develops modular battery swapping solutions using autonomous robots, facilitating efficient energy management for electric vehicles. 

      • Simactricals: Focuses on wireless EV charging technologies, aiming to simplify and expedite the charging process for electric vehicles.

      • CalligoTech: Develops POSIT-based accelerator hardware for high-precision, low-power HPC solutions seamlessly integrated into enterprise systems.

      • TakeMe2Space: Builds affordable, radiation-shielded LEO satellites with onboard compute capabilities to power next-gen space-based AI applications.

      These investments reflect Seafund’s commitment to fostering innovation in critical areas of deeptech, positioning India as a leader in technological advancements. Read More

  1. Future Outlook and Strategic Recommendations

     

    • Projected Growth and Global Leadership
      Inc42 forecasts a 40% CAGR for India’s deeptech sector through 2027, driven by advancements in AI, quantum computing, and space tech. By 2030, the ecosystem is expected to contribute $350 billion to GDP, with startups transitioning from “lab-to-market” at unprecedented scale. Key drivers include:
      • Increased participation from generalist funds at Series A and beyond.
      • Expansion of design-linked incentives for semiconductor startups.
      • Growth in cross-border partnerships, particularly with Japan and the EU in robotics and IoT.
    • Policy Interventions for Sustained Growth
      1. Accelerate Fund Disbursements: Simplify approval processes for the Fund of Funds to ensure timely access to capital.
      2. Strengthen IP Frameworks: Introduce fast-track patent approvals and tax breaks for IP-driven startups.
      3. Enhance Corporate Engagement: Mandate PSUs (Public Sector Undertakings) to allocate 5% of procurement budgets to deeptech solutions.

      India’s deeptech ecosystem stands at an inflection point, buoyed by technological breakthroughs, strategic funding, and policy tailwinds. While challenges like funding gaps and adoption barriers persist, the convergence of academic excellence, entrepreneurial vigor, and global demand positions the country as a future leader in frontier technologies. The next decade will hinge on translating innovation into economic impact, ensuring that deeptech becomes a cornerstone of India’s $10 trillion GDP ambition.

  1. FAQs:

    • What makes deeptech startups different from regular tech startups?
      Deeptech startups in India focus on building solutions grounded in advanced scientific research or engineering innovation. Unlike typical tech startups that often rely on existing platforms or business model tweaks, deeptech ventures tackle fundamental problems using technologies like AI, robotics, quantum computing, or space tech—usually requiring longer development timelines and more R&D funding.

    • Why is deeptech funding on the rise in India now?
      The sharp rise in deeptech funding—up 78% in 2024—is driven by global demand for advanced technologies, India’s skilled engineering talent pool, and supportive policies. There’s growing investor confidence that Indian startups can build globally competitive solutions in AI, semiconductors, and clean energy, pushing capital into this high-impact sector.

    • Which deeptech sectors are currently showing the most potential in India?
      Key areas seeing strong traction include artificial intelligence, which attracted 87% of all deeptech funding in 2024, as well as space tech, quantum computing, robotics, and semiconductors. These fields not only offer commercial potential but also strategic importance for India’s technological self-reliance and global positioning.

    • What challenges are holding back the growth of deeptech startups in India?
      The biggest hurdles include a shortage of deeptech talent, long development cycles, and regulatory complexity. Deeptech ventures also face difficulties in accessing early-stage capital due to the technical risk and slower path to profitability, making targeted government and ecosystem support crucial.

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Table of Content

  • 1. India's Deeptech Ecosystem: Startups, Investments, and Strategic Growth
  • 2. Key Sectors Driving Deeptech Innovation
  • 2.1 Artificial Intelligence and Multi-Agent Systems
  • 2.2 Semiconductor and Hardware Innovation
  • 2.3 Quantum Computing and Robotics
  • 3. Government Initiatives and Policy Support
  • 3.1 ₹10,000 Crore Fund of Funds for Deeptech
  • 3.2 Academic-Industry Collaboration
  • 4. Investment Trends and Venture Capital Activity
  • 4.1 Surge in Early-Stage Funding
  • 4.2 Public Market Momentum
  • 5. Challenges and Structural Gaps
  • 5.1 Early-Stage Capital Shortfalls
  • 5.2 Slow Adoption by Government and Corporates
  • 6. Seafund's Role in Shaping the Future of Deeptech Startups in India
  • 6.1 Investment Strategy
  • 6.2 Portfolio Highlights
  • 7. Future Outlook and Strategic Recommendations
  • 7.1 Projected Growth and Global Leadership
  • 7.2 Policy Interventions for Sustained Growth
  • 8. FAQs