Bengaluru-based Yali Capital has closed its first deeptech-focused fund at 893 crore rupees (US$107.6 million).

This amount exceeds its initial target of 500 crore rupees (US$60.2 million), including an additional 310 crore rupees (US$37.3 million) greenshoe option.

The fund is registered as a Category II AIF with SEBI.

It will invest in early- and late-stage companies in sectors such as semiconductors, AI, robotics, aerospace, and smart manufacturing.

Nearly 78% of the capital raised originated from Indian sources.

This includes entrepreneurs, family offices, corporate partners like Infosys and Qualcomm, as well as fund-of-funds such as SIDBI’s Fund of Funds for Startups and the Self-Reliant India Fund.

🔗 Source: The Times of India

🧠 Food for thought

1️⃣ Deeptech funding gaps make Yali’s success particularly notable

Yali Capital’s Rs 893 crore fundraise comes at a time when Indian deeptech startups face significant funding challenges, especially beyond early stages.

Research shows that deeptech startups receive only one-fifth of the total funding compared to consumer tech companies, with particularly acute gaps at Series A and beyond1.

This funding scarcity stems partly from India’s low R&D spending of less than 1% of GDP, compared to over 3% in countries like the US and Germany2.

The challenge is compounded by the fact that deeptech ventures require longer development cycles and higher capital requirements than typical consumer tech startups3.

Against this backdrop, Yali’s ability to exceed its original Rs 500 crore target by 79% demonstrates strong investor confidence in their deeptech-focused approach.

The fund’s 70% allocation to early-stage investments and 30% to growth-stage deals directly addresses the identified funding gap at later stages.

2️⃣ Government policy shifts create favorable timing for deeptech investors