Debasis Mohapatra Bengaluru

Indiais witnessing rising investment in deep-tech startups, but their eventual success will depend on patient investors who can wait for a long time for successful adoption of these new-age companies’ products and services.

According to industry experts, there is currently a FOMO (Fear of Missing Out) trend among investors like PE and VC funds, which do not want to miss out on the emerging trend. They also said that the increasing number of tie-ups between foreign technology firms and Indian companies in defence, aerospace, semiconductor and other emerging domains augurs well for tech sovereignty in the future. “Deep-tech (investment) is the new flavour. Everyone is investing in deep-tech now. But, deep-tech is a long game. It needs a lot of risk and patient capital. It has to be seen how it plays out because continuous investment will be required for its success,” V Balakrishnan, Chairman of VC fund Exfinity Venture Partners and former CFO of Infosys, told the BizzBuzz.

He also said that it has to be seen how these investors get their exits from these investments. Several deep-tech startups have raised capital in recent quarters as more PE and VC funds invest in such new-age companies.

In June this year, Sarvam AI, which is building India’s own LLM (large language model), raised $234 million in the first close of its $300 million Series B round. Following the fund raise, it attained a valuation of $1.5 billion, joining India’s unicorn club. HCLTech and Bessemer Venture Partners invested in the round, with Nvidia investing $74 million in the AI startup.

In August, Discovered Materials, a startup building AI agents to discover new materials for semiconductor chips, raised $9 million in a seed round from Lightspeed India Partners, Y Combinator and Peak XV Partners.

Similarly, precision manufacturing startup Ethereal Machines raised $28.5 million in a Series B funding round in June this year. The funding round was led by Avataar Ventures, with Peak XV Partners and others participating. According to sources in the know, the government’s push to be self-reliant in critical technology areas is prompting more investors to infuse risk capital in deep-tech startups. They also said that rising partnerships between global firms and Indian companies, or even within Indian entities, are a sign of improving indigenisation. Last week, Reliance Industries announced a partnership with UK-based Rolls-Royce Holdings to develop fighter jet engines in India. Similarly, Voltas has tied up with Atomberg Technologies to manufacture AC compressors in India, which are currently imported by the country from other nations.