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Despite tech prowess, start-ups in space sector find it hard to raise funds

While Isro wants private industry participation and is setting up incubation centres, there are issues related to policies and the general mindset of investors

T E Narasimhan  |  Bengaluru 

space, hotel in space
Representative image

Even as the (Isro) plans to encourage private industries to enter the field of space research, start-ups in this domain are finding it difficult to raise funds, apart from being bogged down by issues relates to policies. This, despite the fact that some of them have good solutions for both satellites and launch vehicles.

Globally, over $18 billion has been invested in start-ups since the year 2000, of which $2.7 billion was came in last year alone. Investors are generally bullish about the market which is expected to increase to $1,104 billion from $339 billion, as demand for satellites and launch vehicles is growing, especially in the commercial

In order to boost its satellite launching credentials in the global market and support 59 upcoming satellite and 40 rockets launches worth Rs 105 billion in the next three years, has called for private participation to build such vehicles.

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While the industry is bullish and upbeat, start-ups in the space sector are finding it difficult to cater to the demand due to lack of funding, policy issues, lack of support in testing etc.

They point out that unlike in the US, UK, Europe and Japan, where several initiatives have been taken up by respective space agencies and VCs to back start-ups in this space, India does not have incubation initiative and funds.


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Srinath Ravichandran, a promoter of AgniKul Cosmos Private Limited, which is focused on building an orbital-class nano satellite launch vehicles, says his company encountered several fundamental obstacles to raising funds, despite the co-founders' experience in academia, finance, law and aerospace engineering.

One such is that the in India focuses mostly on tried and tested software app variants. An aerospace hardware startup is not even in the mandate of most of

PE-VC Investments in Aerospace Companies

Company Investors Amount US$M Date
Exseed Space Exseed Electronics Fund (Mahesh Murthy) N.A* Apr-17
Pinaka Aerospace Solutions KITVEN 0.6 Dec-15
Team Indus Nandan Nilekani, Others 1.5 Mar-15
Maini Global Aerospace Undisclosed 10 Nov-11
Mahindra Aerospace Kotak PE N.A* April-10
Trusted Aerospace & Engg. Subhkam Ventures N.A* Dec-07
HAL Edgewood Technologies Edgewood Ventures 0.35 March-07

"In general, VCs are cautious about investing in sectors where the government and its agencies tend to be the buyers, though there are exceptions," says Arun Natarajan, CEO, Venture Intelligence, a research firm that tracks private companies' financials and transactions such as PE, VC investments.

"This is primarily because of payment related issues. Having said that, there are defence which have got funding. But will it (the funding) be equal to the levels of investment in e-commerce or fintech? It is doubtful," he added.

According to the research firm, investments into the segment, including those made by Infosys co-founder and non-executive chairman into Team Indus, have totalled just over $12 million since March 2007. The amounts invested in some of the deals have not been revealed.

Getting FDI is complicated due to security issues and the fear of sharing sensitive information outside the country, say some (HNIs) in India find it hard to accept that the start-ups are capable enough of building rockets.

There are also issues about awareness among investors in India, despite the fact that many start-ups have been working with ex-scientists and academia experts from IIT-Madras very closely.

Neha Satak, chief executive officer, Astrome Technologies, a start-up that specialises in satellite communication, added that US space agency NASA not only shared its technology but also fund IP initiatives.

"We should create a framework to develop IPs and we also need to build investors confidence," she added.

Similar views were also echoed by other start-ups that were present at the World Space Biz, organised by CII and Antrix at Bengaluru.

They also want friendly start-up policies to gain access spectrum, and backing while implementing their go-to-market strategies, especially to address global demand.

Utsav Shah, founder and managing director, Kohesi Bond, echoes his peers' views, adding that test facilities need to be opened up for start-ups since they involve huge costs, which start-ups cannot afford.

The start-ups have urged the Department of Space to work with state governments to help new ventures across the country to partner both centrally with DoS and with their respective local state governments.

An official from said that it would be difficult for his organisation to fund start-ups due to budget constraints.

While its plans to hand over manufacturing know-how for small rockets and satellites to industry, could only benefit in the downstream of production activity and not directly by participating in the space missions, said some investment experts.

It may be noted that the Space agency is in the process of setting up incubation centres in various parts of the country to encourage innovation among young entrepreneurs.

NavIC to hit the market next year

India's own satellite-based positioning system NavIC (Navigation with Indian Constellation), similar to the Global Positioning System (GPS), is likely to become commercially implemented from 2019.

The chips to be used for this is expected to be ready in next six months, according to senior officials of Isro.

Isro has been calling for tenders to start its implementation. It could be used in navigation services such as in mobile phones and navigation gadgets in vehicles, etc. It is designed to provide accurate position information service to users in India as well as the region extending up to 1500 km from its boundary.

First Published: Fri, September 07 2018. 19:46 IST
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