Synopsis
Sector-agnostic VC firms Kalaari Capital and Blue Ashva Capital are among those exploring new deeptech-focussed vehicles amid rising investor appetite around areas such as spacetech, semiconductors, robotics and energy transition, people aware of the matter told ET.Listen to this article in summarized format
Sector-agnostic VC firms Kalaari Capital and Blue Ashva Capital are among those exploring new deeptech-focussed vehicles amid rising investor appetite around areas such as spacetech, semiconductors, robotics and energy transition, people aware of the matter told ET.
Kalaari Capital is in talks to launch a Rs 500-600 crore deeptech fund, while Blue Ashva Capital is planning a Rs 300-400 crore vehicle this year, the people said. Mumbai-based Blue Ashva has backed startups such as Dhruva Space, GreenJoules and Godi Energy.
“Multiple VCs are exploring a structure where nearly half the corpus is raised from private LPs (limited partners) and the rest from the RDI pool,” a deeptech VC said.
Queries sent to Bengaluru-based Kalaari and Blue Ashva remained unanswered at press time Monday.
The Technology Development Board (TDB), one of the two second-level fund managers for the RDI fund, earlier this month selected 22 startups and disbursed the first tranche from its corpus. The board expects to allocate around Rs 500-600 crore this financial year directly to startups.
"It will be interesting to see how generalist VC funds bring in new partners specifically for deeptech investing. Ideally, these should be people who have actually built or operated deeptech businesses themselves and understand what it takes to create such companies. Deeptech startups in India require a lot of handholding," said Ganapathy Subramaniam, partner at Yali Capital.
Industry experts said many such fund launches are expected in the next few months.
The recently launched Mettle Capital, founded by the former Peak XV trio of Ashish Agrawal, Ishaan Mittal and Tejeshwi Sharma, said deeptech will be one of its core themes. The fund is currently in talks to raise $350-400 million.
“For a while, only the application-layer saw significant value creation, and the venture industry was focused on that. In the last few years, however, the hardware industry has seen a resurgence in value creation, particularly across semiconductors, space tech, and defense,” said Agrawal, who led the investments in Agrani Labs and C2i Semiconductors during his tenure at Peak XV.
Mela Ventures, Ideaspring Capital, Blume Ventures, 3one4 Capital, Chiratae Ventures Wyser and several other India-domiciled fund managers have also applied for RDI capital, which will need them to make investments in the sector.
Last week, Shastra VC announced a $100 million deeptech vehicle and is expecting some capital from the RDI. Piper Serica too launched a Rs 800 crore fund focussed on this space.
Speciale Invest, which in December announced a Rs 1,400 crore deeptech fund, is expected to seek around half the amount from the RDI pool, as per sources.
FOMO and risks
Investors who have been in the space for a while say deeptech requires patient capital and longer gestation periods, which is why funds have kept away. While they welcome the renewed interest, they believe some firms will rush in aggressively without fully understanding the sector.
“The challenge is that ‘deeptech’ is a catch-all term. It includes biotech, semiconductors, aviation, defence, robotics and more. Each of these sectors has enormous depth. If you are trying to invest across all of them, it becomes difficult to know what will work and what will not,” said Arpit Agarwal, a partner at Blume Ventures who looks at deeptech.
Some funds may overpay or make hasty bets, he said. “The reality of the business has to prevail. The company still needs product-market fit, scale and profitability. Higher valuations may help investors enter a deal, but they do not guarantee returns.”
Another investor said that in other countries, deeptech is no longer treated as one category. There are specialised funds on biotech, semiconductor and robotics and so on. That level of specialisation will likely emerge in India as well over the next few years.
VCs also hope that when the RDI capital is being deployed, the government will look at creating a value chain across the ecosystem, from pre-seed and seed to series B, C and growth stages. Firms also expect demand for PhDs and domain specialists to go up as they look to deploy capital based on IP-creation.
"Execution speed will matter enormously. Policy announcements alone are not enough. The government will need to ensure that agreements are completed quickly, money gets transferred fast and processes remain founder-friendly," Yali's Subramaniam said.
“Technical diligence is becoming increasingly critical in deeptech investing, with funds looking to build teams that can evaluate proprietary technology, product architectures and long-term commercial viability,” said another investor.
According to Venture Intelligence data, deeptech funding in FY26 saw renewed interest, raising about $1 billion.
