India’s Deeptech Investors Are Playing the Long Game
When Skyroot Aerospace’s Vikram-1 rocket successfully reached orbit on July 18, it did more than place India on the private space map. It validated what deeptech investors had been betting on for years—that India’s frontier technology sector could deliver globally competitive outcomes. Yet even as the celebration continues, a more complex picture is emerging: mega deals have slowed, funding values have dipped, but investor sentiment has rarely been stronger.
The Numbers Tell an Incomplete Story
At first glance, the data appears contradictory. Deeptech startups raised approximately **$610 million in the first half of 2026**, down 25% year-on-year from about $810 million. The decline is even steeper when compared to the $2.18 billion raised in H2 2025.
But investors argue this reflects the absence of a few large growth-stage rounds rather than weakening conviction. Deal activity has remained largely consistent—93 transactions in H1 2026 compared with 88 in the year-ago period . The steady pace of dealmaking suggests investors continue to back deeptech startups, even if they’re writing fewer mega-cheques.
“The mood is as positive as it gets,” said Arjun Rao, general partner at deeptech-focused VC fund Speciale Invest . “We are seeing immense activity. The quality and quantity of founders are increasing, early-stage activity is very good, and more funds are investing in deeptech today than they were a few years ago.”
A Structural Shift, Not a Slowdown
The apparent funding slowdown reflects where India’s deeptech ecosystem actually stands. Unlike software startups that can scale in 3-4 years, deeptech companies typically spend around 10 years developing and validating technologies before commercialisation . This results in longer funding cycles and fewer companies capable of raising large follow-on rounds.
“The companies that raised money last year are not going to raise money this year,” Rao noted. “They might raise next year or the year after that depending on their progress” .
The data supports this pattern. While total funding has increased steadily over the past three years, the number of investment rounds has declined . In FY24, Indian deeptech startups raised $1.06 billion across 450 rounds. A year later, funding rose to $1.74 billion across 449 rounds. By FY26, total funding climbed further to $1.93 billion even as rounds fell to 341—a 24% drop from FY24 levels .
Policy Tailwinds and Patient Capital
Investors point to a series of government initiatives that have reinforced confidence in the sector. The ₹1 lakh crore Research, Development and Innovation (RDI) Fund, expanded support through the SIDBI-backed Fund of Funds, the IndiaAI Mission, and stepped-up incentives for semiconductors, defence, and space have created a supportive policy environment .
“There is a clear policy push to accelerate capital deployment into deeptech,” said Manu Iyer, founding partner at early-stage deeptech investor Bluehill VC . “The government’s mandate is to get more money into the ecosystem faster, and that intent is visible across multiple initiatives. If anything, more capital will come.”
The Semicon 2.0 policy, approved with a ₹1,27,500 crore outlay, is a case in point . It focuses on six pillars—design, machines and materials, fabs, ATMP/OSAT, R&D, and talent development . So far, 105 startups have begun developing chips, while 24 semiconductor design projects have been approved for financial support .
Venture capital firms are also stepping up. Aum Ventures launched its $80 million India Innovation Fund II to back pre-seed and seed-stage deeptech startups . Fundamentum Partnership launched Fundamentum Frontier Advisors (F2A), a platform with a total investment capacity of ₹3,000 crore focused on AI and deep technology . Transition VC launched its ₹1,500 crore Fund II for energy-tech startups .
Skyroot’s Validation Effect
Skyroot’s unicorn status—reached in May 2026 with a **$1.1 billion valuation** after raising $60 million from GIC and BlackRock —has become a price anchor for the sector . As Vipul Patel of IIMA Ventures noted, “Sovereign wealth funds and large asset managers tend to move in clusters—the probability that other global peers look at Agnikul or Pixxel’s next round increases” .
The successful Vikram-1 launch is expected to accelerate commercial activity across the spacetech value chain—launch providers, satellite makers, component suppliers, ground stations, and mission-ops firms . Startups like Digantara and Dhruva Space have said Skyroot’s success brings much-needed launch predictability .
The New Breed of Founders
Beyond the numbers and policies, investors highlight a qualitative shift. A new generation of founders is taking on complex engineering challenges with global ambitions from day one .
“The ambition of what people want to build and the way they’re thinking from day one—we’re seeing a step change,” said Natasha Malpani Oswal, managing director at AI-focused VC firm Boundless Ventures . “These founders have an almost irrational belief that they can build something the world needs. The capital can only support that, but it can’t create that.”
The Road Ahead
While funding values may continue to fluctuate with the timing of large rounds, the underlying momentum remains intact. The ecosystem is producing more companies capable of raising sizeable growth-stage rounds in the years ahead . With policy support strengthening, specialised capital becoming more readily available, and a new generation of globally ambitious founders emerging, India’s deeptech story is just beginning—and investors are playing the long game.
