Long seen as niche and capital-intensive, deeptech is now gaining meaningful traction among venture capitalists (VCs). The sector, which faced limited funding and slow adoption, is now finding stronger interest as issues like self-reliance in energy, defence modernisation, semiconductor self-sufficiency, and climate resilience gain traction.
This shift is reflected in a clear uptick in funding activity. In the first four months of 2025, deeptech startups raised $324 million across 35 deals, more than double the $156 million raised across 21 deals during the same period last year, according to data from Venture Intelligence. According to investors, this momentum signals a maturing ecosystem where deeptech ventures are no longer seen as too early or too risky, but as potential engines of long-term value and innovation.
“The increased interest by investors reflects a maturing conviction in India’s long-term innovation potential,” said Brijesh Damodaran, managing partner at Auxano Capital. “Deeptech ventures, across AI/ML, advanced materials, semiconductors, spacetech, are increasingly seen as commercially viable opportunities with strong IP moats and revenue-generating businesses,” he added.
Bengaluru-based 3one4 Capital is among the firms strengthening its deeptech focus. Known for early bets on ToneTag and Bugworks, the firm has continued to invest in companies such as Exponent Energy, Agnit, Fermbox, and Scimplify. “Our belief in India’s deeptech ecosystem has continued to rise,” said Sonal Saldanha, vice president, investments, 3one4 Capital. “We continue to track strong tailwinds across manufacturing-driven themes like energy, semiconductors, materials innovation and industrial automation,” he told Fe.
Other early-stage firms including Speciale Invest, Ideaspring Capital, and Mela Ventures are actively raising new funds, while Java Capital and Bharat Innovation Fund are planning to increase the size of their upcoming fund raises. Seafund aims to make up to 20 investments by FY27 from its Rs 250 crore Fund II. Chennai-based Bluehill VC is targeting five investments in IP-led deeptech startups by the end of FY26.
Artha Venture Fund has also outlined plans to participate in 18–20 investment rounds this year, with a focus on applied AI, spacetech, and semiconductors. Even academic institutions are stepping in. Most notably, IIT Madras is launching a Rs 200 crore ‘IITM Alumni Fund’ to back early-stage deeptech startups.
Beyond funding, there are broader changes supporting this momentum. The sector’s persistent challenges, such as limited domestic R&D infrastructure, talent flight, and slow-moving policy frameworks, are beginning to ease. Returnees from global tech hubs are bringing valuable R&D and commercialisation experience, and the government’s continued commitment, including a second tranche of Rs 10,000 crore in July under its Deeptech Fund-of-Funds, is helping close funding gaps.
Speciale Invest, which recently launched a dedicated deeptech fund, says the decision was shaped by a combination of market readiness, founder depth, and alignment with national goals. “We believe this shift reflects the maturing of India’s technology ecosystem,” said Vishesh Rajaram, managing partner at the firm. “We are seeing world-class technical talent in India stepping up to solve foundational challenges,” he added. The fund plans to back 20 companies over the next four years.
To support these companies beyond capital, VCs are developing in-house capabilities tailored to deeptech’s unique needs, like technical evaluation, go-to-market strategy, and long-term capital planning among them. “The VC ecosystem is engaging with this opportunity by also creating a pool of deep technical domain knowledge, ecosystem connectivity, and business building expertise within their firms,” said Anjali Bansal, founding partner at Avaana Capital. “This focused approach is essential to support these ventures from lab to scale,” she said.
Avaana Capital, which invests in sustainability-focused technologies, has already deployed a third of its $135 million Avaana Sustainability Fund into deeptech ventures. “We are bullish on frontier technologies that act as force multipliers delivering superior returns, large outcomes and global competitiveness,” Bansal said.
There is also a broader shift underway in how Indian VCs view early-stage innovation. “As India moves from a consumer-tech-first VC ecosystem to a product-building one, firms are revisiting the existing thesis,” said Damodaran. “Specialised deeptech teams can look at and underwrite high-tech risk, build patient capital strategies, and unlock non-linear outcomes,” he noted.
With capital beginning to flow, institutional support growing, and a strong pool of technical talent emerging, deeptech appears to be entering a new phase, one where commercial opportunity and national strategy are closely aligned. For VCs willing to take a long-term view, the sector may finally be coming into its own.