Eight venture capital and private equity firms from the US and India have launched the India Deep Tech Investment Alliance, pledging over US$1 billion to fund Indian deep tech startups over the next decade.

The group includes Accel, Blume Ventures, Celesta Capital, Premji Invest, Gaja Capital, Ideaspring Capital, Tenacity Ventures, and Venture Catalysts.

Each firm will commit private capital to Indian-domiciled startups in AI, semiconductors, space, robotics, biotech, energy, and climate tech.

The alliance aims to fill funding gaps, provide mentorship, and support local expansion.

It comes after the Indian government approved an US$11 billion scheme to boost deep tech R&D.

An advisory committee with representatives from the participating firms will coordinate objectives, but each fund remains independent.

The alliance also plans to engage with the Indian government on policy and regulatory matters affecting startups.

🔗 Source: TechCrunch

🧠 Food for thought

1️⃣ Alliance addresses India’s documented deep tech funding shortage

The $1+ billion commitment directly targets a well-documented gap in India’s startup ecosystem where deep tech ventures struggle to secure adequate funding.

Only around 1,000 of India’s 159,000 recognized startups operate in deep tech sectors, and these companies received just 5% of total startup funding in 2023 compared to 35% in China1. This scarcity prompted Commerce Minister Piyush Goyal’s April criticism of Indian startups for focusing on food delivery instead of foundational technologies.

India’s broader R&D spending of just 0.64% of GDP compared to China’s 2.4% further illustrates the systemic underfunding that this alliance aims to address2.

The alliance’s focus on early-stage funding from seed to Series B specifically targets the stage where deep tech companies most struggle to find patient capital, as these ventures typically require longer development cycles than consumer-focused apps.

2️⃣ Collaboration proceeds despite escalating trade tensions between the nations

The alliance launch demonstrates how strategic technology interests override current diplomatic friction between the US and India.