Deep-tech, AI bets gather pace as investor appetite strengthens: VCs

Venture capitalists say stronger IPO exits have boosted LP confidence in long-gestation deep-tech and AI ventures, with family offices also stepping up bets in the sector

Deep-tech and artificial intelligence (AI) startups have sharply whetted the appetite of investors and limited partners (LPs) over the past decade, and the ecosystem is expected to double down on such bets going forward, say venture capitalists (VCs).

 

While speaking at the India AI Impact Summit, VCs said that one of the reasons for this shift has been the successful listing of startups over the last two years.

 

Siddarth Pai, founding partner at 3one4 Capital, said: “The LP appetite has now become a lot stronger for longer-gestation products, and fund managers don't mind spending 15-20 years.”

 

Pai said earlier that the biggest issue people had with the Indian venture ecosystem was the mistranslation of paper gains to actual hard cash.

 

“The IPO market has now shown that Indian assets can find buyers in the public market as well, and they can perform exceptionally well. There's a lot more appetite to end up actually going deeper into the entire stack as of now,” he said.

 

An India Deep-Tech Alliance (IDTA) report shows that in 2025, deep-tech investment constituted 15 per cent of the total PE-VC investment in the country. While deep-tech investments overall stood at $5.1 billion last year, AI investments accounted for almost half at $2.5 billion.

 

Echoing Pai’s views, Kris Gopalakrishnan, chairperson of Axilor Ventures and co-founder, Infosys, said: “Over the last four to five years, a lot more family offices and high net worth individuals have started to invest in the startup ecosystem. They have also set up their own alternate investment funds (AIFs).”

 

Gopalakrishnan, however, called for larger AIFs, which can write bigger cheques in the late stage.

 

Robotics firm Miko is an example of the rising appetite among Indian family offices. Sneh Vaswani, co-founder and chief executive officer (CEO), said: “We (deep-tech firms) were not the prime targets of most institutional venture money earlier. On our cap table, half of investment has come in from institutions, while the other half has come in from family offices.”

 

Vaswani added that of the $80 million Miko has raised to date, $70 million was from homegrown investors.

 

A family office itself, Premji Invest, said it plans to make significant investments in deep-tech companies in the country. “Family offices are now starting to look actively in the deep-tech space because we see an opportunity in India, because talent is there and capital is coming,” a representative said.

 

Investors also lauded the central government’s research, development and innovation fund (RDIF) worth Rs 1 trillion and said that it could act as a catalyst in the deep-tech ecosystem. “I am hoping that this will probably catalyse a deep-tech revolution in India,” Gopalakrishnan said.

 

However, there is also broad agreement that India lacks a major success story to showcase its indigenous innovation to the world. “India lacks a poster child for innovation,” said Gopal Jain, managing director and CEO of Gaja Capital. “Unlike China, we don't have a global image. It's tougher to sell Indian innovation and deep-tech investing to global investors.” He added that the public sector and policy have an instrumental role to play, especially in the initial stages when the risk of market failure is high.

IDTA announces $2.5 billion fund for deep-tech and frontier AI companies

Underscoring the momentum, IDTA has announced a $2.5 billion fund aimed at backing next-generation AI and frontier technology companies, of which $1 billion will be dedicated to Indian AI startups over the next three years. The alliance includes venture capital firms like 3one4 Capital, Accel, Blume Ventures, Celesta Capital, and Chiratae Ventures, among others.

 

During the announcement, S Krishnan, secretary of the Ministry of Electronics and Information Technology, said: “This is an extremely significant measure, and it reflects the confidence in supporting deep-tech investments in India. It shows that there's a recognition that there is a vibrant deep-tech sector. There are innovators in that sector with ideas, where experienced investors believe that investments can be made. This is a vote of confidence. Also, instead of Indian startups necessarily having to flip and go across to some other jurisdiction to raise money, it should be possible now to do it in India itself.” 

AI Investments in India

 

Deep-tech Investments in India