U.S. and Indian Firms Pledge Over $1 Billion to Boost India’s Deep Tech Startups
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Eight U.S. and Indian venture capital and private equity firms – including Accel, Blume Ventures, Celesta Capital, and Premji Invest – have formed an unusual coalition to back India’s deep tech startups, pledging more then $1 billion over the next decade to strengthen U.S.-India tech ties.
The alliance addresses longstanding funding concerns. In April, Indian Commerce Minister Piyush Goyal drew criticism after slamming domestic startups for focusing on food delivery instead of innovation, contrasting them with Chinese firms. Several investors and founders countered that India lacks capital for deep tech ventures and said Goyal’s comments overlooked the determination of founders building for the local market. The new alliance appears to address these concerns, aiming to channel long-term private capital into deep tech ventures that many founders say have struggled to secure funding in India.
The move stands out becuase investors typically compete for deals rather than formally band together under a named alliance with binding pledges. While VCs frequently enough co-invest on a deal-by-deal basis, most cross-border collaboration occurs informally thru individual fund strategies, rather than through coordinated capital blocs.
Called the India Deep Tech Investment Alliance, the group brings together Celesta Capital, Accel, Blume Ventures, gaja Capital, Ideaspring Capital, Premji Invest, Tenacity Ventures, and Venture Catalysts. The launch follows the Indian government’s approval of a ₹1 trillion (approximately $11 billion) Research,Development,and innovation (RDI) scheme,announced in the national budget earlier this year to boost deep tech R&D.
Under the alliance, each member will commit private capital over a 5- to 10-year period to Indian-domiciled deep tech startups. Currently, there are relatively few such companies, as many of India’s best-known deep tech ventures with Indian founders are incorporated in the U.S. however, New Delhi has made local incorporation a requirement for incentives under its new RDI scheme, which the alliance members aim to leverage.
Along with funding, the members will offer mentorship and network access. The firms also plan to utilize the alliance to help their portfolio companies expand into both the U.S. and Indian markets.
Indian Investors Form Alliance to Boost Deep Tech, Engage with Government
A new alliance of Indian venture capital firms and investors has been formed to channel long-term capital into the country’s burgeoning deep tech startup ecosystem and to act as a unified voice when engaging with the Indian government on policy matters. The group aims to streamline investment in key sectors and advocate for a more stable and supportive regulatory environment, addressing past concerns about policy changes implemented without sufficient industry consultation.
Alliance Structure and Membership
The alliance, details of which where reported by TechCrunch, will operate as a platform for information sharing, coordinated due diligence, and co-investment opportunities. Members will voluntarily share information and collaborate on pipeline development.
Founding members include Accel,Premji Invest,and Venture Catalysts. An advisory committee, comprised of representatives from these firms, will establish shared objectives and ensure coordination while maintaining the independence of each individual fund. [Kumar (last name not provided in source)] is the inaugural chair,with leadership rotating among members in the future.
Eligibility and Investment Focus
While the alliance itself doesn’t define specific eligibility criteria, participation is contingent upon adherence to the requirements of the Indian government’s Registered Fund for Infrastructure and Alternative Investment (RDI) scheme. This includes investment in “sunrise” sectors – areas identified as having high growth potential – and backing India-domiciled startups. Invest India defines “sunrise” sectors as including areas like biotechnology, space tech, nanotechnology, and artificial intelligence.Securing necessary local regulatory approvals is also a requirement.
addressing Past Regulatory Concerns
The formation of the alliance is partly a response to past instances where abrupt regulatory changes in India have created instability for investors. Previously, policy shifts implemented without industry input have led to significant disruption and criticism, particularly from U.S. investors, with some changes being subsequently withdrawn following widespread objections.The alliance aims to prevent similar situations by fostering proactive dialog with the government.
Potential Benefits and Risks for Deep Tech Startups
The alliance is expected to provide several benefits to Indian deep tech startups.Pooling long-term capital and presenting a unified front to the government are seen as positive developments. However, there’s also a risk that a lack of coordination could leave promising companies unsupported.
“Over the next decade, startups will build in India and export breakthrough solutions to the world. The tailwinds are in place: ambition, talent, policy intent, and patient capital,” said Anand Daniel, partner at Accel.
Looking Ahead
The alliance represents a significant step towards strengthening India’s deep tech ecosystem. By facilitating investment and advocating for favorable policies, the group hopes to unlock the country’s potential as a global hub for innovation.The success of the alliance will depend on its ability to maintain effective coordination and build a constructive relationship with the Indian government.