Deeptech Funding in India: Understanding the Shift

Deeptech has secured less than 1% of India’s total startup funding from 2014 to 2025, amounting to just $1.6 billion out of a total pool of $164 billion. In addition, seed-stage funding decreased by 31% year-on-year in the first half of 2025, adding further pressure on early-stage deeptech ventures that require long-term support to evolve. Over 30% of investors have pointed to the absence of patient, long-term capital as the primary hindrance to deeptech innovation, according to the StartupSuperb Investor Sentiment Survey.

Capital Flows in India’s Startup Ecosystem

In India’s startup ecosystem, capital inflows are often celebrated as indicators of growth. On the surface, there are reasons for this optimism: as per StartupSuperb’s H1 Funding Report, $5.7 billion was raised in just the first half of 2025, with India producing five new unicorns, eleven mega deals over $100 million, and welcoming more than 1,100 investors. These impressive figures paint a picture of significant momentum.

However, the underlying narrative reveals that the true story lies not just in the amount of capital, but in how that capital is utilized once it arrives. A closer examination of funding patterns indicates that while AI and deeptech are recognized as prime early-stage investment targets, the actual distribution of funds reflects a different reality.

Insights from H1 2025 Data

Upon a detailed review of the report, it becomes evident that there exists a palpable disparity between the excitement within the ecosystem and the reality of funding allocation.

The figure of $5.7 billion for the first half of 2025 suggests a recovery. However, a breakdown of the sectoral allocations reveals significant gaps. In stark contrast, fintech and e-commerce accounted for nearly half of all mega deals exceeding $100 million during this period. Despite growth-stage capital exceeding $2 billion, the focus predominantly remained on established commercial models rather than cutting-edge technologies.

The Importance of Recognizing Disconnections

This disconnect is crucial. When funding for deeptech lags behind the prevailing discourse, it highlights a deeper issue: the system seems to prioritise movement over substance. It is generally easier to finance a second-layer fintech venture than to invest in a first-principles startup that delves into frontier technologies. This observation isn’t a criticism; it’s a reality rooted in existing structures. Yet, this reality cannot be overlooked.

The Need for Patient Capital

If capital alone could serve as a measure of ecosystem maturity, India would have reached its destination. The numbers indicate that unicorns are once again prominent in the headlines. However, the true value of capital lies in the duration of its commitment. Early-stage funds typically operate within 5 to 7-year horizons, yet deeptech ventures rarely begin to demonstrate results within that timeframe. Investors often enter early, accept risks, and just as potential begins to materialise, they seek exits due to the fund’s time constraints.

The phrase “exponential outcomes do not occur on linear timelines” is frequently reiterated. And yet, fund models continue to be designed for constrained exits, rather than breakthroughs that are time-aligned. This is where the concept of Patient Capital becomes vital—it refers not only to longer-term investments but also to capital structured to endure the uncertainties inherent in innovation. Such capital understands the nuanced nature of successful advancements and does not evaluate success solely based on interim returns.

Rethinking Capital for Innovation

To truly foster enduring innovation, it is essential to reconsider the sources and objectives of our capital investments. Deeptech requires funding that is resilient over the long term, rather than short-term gains.

A new wave of funding is gradually emerging, featuring strategic, sector-specific funds that are prepared to work within 10-year horizons. There are indications of progress, as highlighted in the report, with some institutional funds of up to $185 million beginning to invest in sectors such as healthcare, biotech, cleantech, and innovation driven by students. These fields often require a decade for outcomes to materialise, rather than quarter-by-quarter assessments.

Funding Ambitions with the Right Timeline

While discussions about ambition are frequent, we rarely inquire whether that ambition is funded according to its natural timeline. Exponential outcomes are cultivated through the combination of time, trust, and capital that can endure when results are not immediately apparent.

Until this model becomes the standard rather than an exception, fund managers will be compelled to respond to the prevailing noise in the market. There is an abundance of impatient capital seeking immediate results in a capital-driven economy. Currently, markets reward rapid movement and returns, which creates pressure that trickles down. Consequently, even fund managers invested in deeptech often find themselves obliged to adopt shorter-term strategies, as many limited partners are not inclined to commit for the long haul.

Deeptech investments require a distinct perspective that can only be sharpened through cycles of trial, error, and time. If nobody gains that experience at present, then when limited partners eventually recognise the potential, there may not be qualified individuals available to navigate it.

For India to emerge as a leader in innovation, funding must be approached with the mindset of committing to the long game—preparing for the second half rather than merely the opening act.