Deeptech startups must prove their market viability by delivering real value at scale. While returns can be significant, India needs long-term funding to support deeptech ventures, says Arpit Agarwal, Partner at Blume Ventures, in an interview with Forbes India.
Betting on Deeptech Before It’s Obvious
Blume Ventures has built a reputation for acting decisively rather than waiting for consensus. Agarwal recalls backing Carbon Clean, a carbon capture startup from IIT-Kharagpur, in 2011-12 despite its lack of a concrete business plan. Over the years, the company refined its model, secured UK government grants, and is now a global leader in industrial carbon capture.
Blume’s investment approach is based on first principles rather than rigid theses. “We foresee emerging needs like carbon capture and invest in motivated teams aligned with these trends,” he says. This conviction-led strategy extends to deeptech, electric vehicles (EVs), and SaaS, where Blume prefers to lead rather than follow.
What Defines Deeptech in India?
Deeptech startups, whether in Silicon Valley or India, leverage years of research to develop groundbreaking technologies. Unlike conventional software startups, these companies solve highly complex problems through unique innovations.
Sectors like biotechnology, med-tech, drones, cybersecurity, AI, and advanced EV components are key examples. These innovations often take years to mature before becoming commercially viable, but they have the potential for significant global impact.
The Deeptech Opportunity in India
Venture capital (VC) is designed for companies that initially operate at a loss but have the potential to become highly profitable. This makes it a natural fit for deeptech—despite challenges in securing funding beyond early stages.
Agarwal cites Ati Motors, an IISc spin-off working on autonomous robots, as an example. It invested heavily in R&D for six years before achieving traction. Today, with gross margins of 60-80% and little competition due to its unique tech, it highlights the potential of deeptech investments.
Historically, Indian VCs were cautious about deeptech due to market readiness issues and reliance on global customers. However, 2024 marks a turning point, with growing investor interest and a maturing ecosystem expected to drive the sector’s growth over the next decade.
Key Drivers of Deeptech Growth
India’s biotech sector offers a blueprint for how deeptech ecosystems mature. Initiatives like BIRAC have nurtured early-stage innovations, helping create a talent pool of entrepreneurs who are now scaling bigger ventures.
This cycle—where experienced founders create successful companies, attracting more funding—strengthens investor confidence. As seed-stage funding grows, the pipeline for Series A, B, and IPO-stage companies expands.
With Indian markets becoming more receptive to biotech and deeptech solutions, local startups can now sustain operations domestically rather than solely targeting global customers. This shift is fostering greater investment and innovation.
Next-Gen Deeptech Startups in India
Agarwal highlights Yakrit, a biotech startup developing a machine that replicates liver functions outside the body—something never achieved before. Other promising startups include:
- A company working on novel battery anodes to improve capacity and lifespan.
- Bio-bots designed to navigate and clean tooth enamel tubules, emerging from Indian research labs.
These breakthroughs reflect India’s ability to translate cutting-edge research into real-world solutions. However, commercial success often takes years of rigorous development and validation.
Cracking the Deeptech Go-to-Market Challenge
Bringing deeptech to market is complex and varies across industries like med-tech, EVs, and green hydrogen. However, one principle remains constant: products must deliver immediate and tangible value to customers.
For instance, Ati Motors’ bots provide a clear financial advantage—offering an 18-month payback period in India—making adoption easier. Close customer engagement and iterative product improvements are crucial to ensuring viability.
Beyond initial success, scaling up requires careful planning. While traditional VC models are proving effective, sectors like life sciences may need longer-term investments. Indian funds typically operate on 10-year timelines, but deeptech—especially in biotech—may require 15-year funds.
“We haven’t seen 15-year funds in India yet, which is why life sciences startups still struggle with funding,” Agarwal notes. “But it’s only a matter of time before that changes.”
The Road Ahead
India’s deeptech sector is at an inflection point. With more experienced founders, increasing investor confidence, and improving market readiness, the next decade could see significant growth. However, long-term capital is essential to support high-impact innovations.
As the ecosystem matures, deeptech investments will likely accelerate—ushering in a new era of technological breakthroughs from India.
