Deeptech terrain is one of big promises, small cheques: Tracxn data

PE/VC funds pledge $1 billion, but average deal sizes remain below industry needs

Even as a coalition of private equity (PE) and venture capital (VC) firms from the US and India on Tuesday announced the formation of an alliance at SEMICON India 2025 — with an initial commitment of $1 billion to invest in deeptech companies — the overall funding from PE/VC firms in India’s semiconductor and deeptech startups since 2021 has been only $5.5 billion, according to data from Tracxn.

 

Between 2021 and now, PE/VC funds have participated in more than 943 investment rounds in semiconductor and deeptech startups, with the average deal size at just $5.8 million — far below what the industry requires. This mismatch even prompted Commerce Minister Piyush Goyal to remark that while Indian startups are busy selling “fancy ice creams”, their counterparts in China are building self-reliance by betting big on artificial intelligence and semiconductors.

 

Year-wise numbers show a clear decline. Funding in semiconductors (including chip manufacturing and chip design) and deeptech peaked at $1.9 billion in 2022, before falling to $987.87 million in 2023. The figure remained nearly flat in 2024 at $987.91 million. In 2025 so far, there has been a small kick-up, with PE/VC investments at $879.7 million — with four months still left in the year.

 

In 2022, PE/VC funds invested an average of $8.7 million per round across 217 deals — the strongest year so far. But in 2024, the average ticket size fell sharply to $4.7 million across 207 deals. In 2025 to date, the number of deals is lower — 113 — but the average deal size has improved to $7.7 million, better than 2024 but still below 2022 levels.

 

While private capital has slowed, the government has stepped in to support the sector. One major push has been the clearance of 23 chip design projects under the design-linked incentive scheme, with ~1,000 crore earmarked for support. In addition, more than 72 startups have been granted access to advanced electronic design automation tools, essential for chip design.