India's deep-tech startups struggle with product-market fit: Investors

As India accelerates its innovation landscape, deep-tech investors say the country faces challenges in finding a product-market fit.

 

Speaking at the second edition of Startup Mahakumbh on Thursday, investors emphasised that while the country’s startup ecosystem is buzzing with momentum, deep-tech products often struggle to transition from the research and development phase to successful commercialisation.

 

According to the Economic Survey 2023–2024, India has over 13,000 Department for Promotion of Industry and Internal Trade (DPIIT) recognised startups in artificial intelligence (AI), internet of things (IoT), robotics, and nanotechnology.

 

Raghu Dharmaraju, chief executive officer of ARTPARK, an artificial intelligence and robotics hub, said, "Sometimes when we try to deploy our models, the biggest challenge is bringing value and fit to a potential customer as a full solution. There could be interesting research but there is a whole journey of discovery of what product needs to be built and how to deliver value."

 

He added that another challenge is the talent or teams building this research are essentially researchers and not entrepreneurs.

 

Echoing Dharmaraju’s thoughts, Arjun Rao, general partner at Speciale Invest, a deep-tech fund that has made 14 investments to date, said, "There is not enough awareness about how this will (academic research) create value, where this will get used, and what could be the applications. The engagement with the industry or users is also not enough. It largely becomes an afterthought."

 

Narendra Bhandari, general partner, Seafund, another deep-tech investor, emphasised that Indian startups need to solve not just problems of the coming four to five years but fundamental problems and issues. He also pushed for the coming together of industry, academia, users, investors, and the government to further innovation.