While the private sector awaits the modified policy for foreign direct investment (FDI) in the space sector, Bengaluru-based space tech startup Digantara had to navigate through bureaucratic red tape, as a large chunk of its $10 million fundraise came from outside the country.
Digantara on June 20 announced that it had raised $10 million in a Series A1 funding round led by Peak XV Partners (formerly Sequoia Capital India). The round also saw participation from Kalaari Capital, Global Brains, Campus Fund, and the founders of IIFL Wealth.
The startup offers solutions in the space situational awareness segment, which is the total understanding of the orbital environment, with accurate data on space radiation and where each object is located.
In addition to reassuring investors with the help of space regulator Indian Space Promotion and Authorisation Centre (IN-SPACe) that the modified FDI policy in the space sector would soon be approved, Digantara also had to make some structural changes to its Indian operations in order to make this investment happen, CEO and co-founder Anirudh Sharma told Moneycontrol.
Currently, FDI in the space sector is allowed up to 100 percent in the area of satellite establishment and operations, but only through the government route. The government is currently considering revising this policy to facilitate foreign investment in the private space sector.
"IN-SPACe spoke to our investors. They gave some comfort that the policy would change and things will change soon in the ecosystem. Legally, we had to do some structuring work internally within the company," he said. The restructuring of its Indian operations became necessary because Digantara also established an office in Singapore in 2022.
The startup kicked off its Singapore operations with an eye on the FDI situation in India, and their larger ambition of being a global player in the space situational awareness (SSA) segment. "If the FDI is relaxed, it's easy for us to do everything in India. However, at this point in time, because there are a few things we need clarity on, we're operating from two different entities," said Sharma.
So for landing the investment through the current FDI structure (through the government route), Digantara had to make sure that their Indian office is the startup's headquarters.
"We had to look at some kind of restructuring for our company in such a way that we don't become a company that's not based out of India; we are still fully owned, or have headquarters in India and the parent company is in India...," Sharma explained.
For these reasons, Sharma is calling for the Indian government to release the revised FDI for the space sector soon.
"FDI in the space sector is always strategic to any nation. So they don't want to give away the control of it. At the same time, we need to flourish the local economy, for which we require global investments to come into India. For that to happen, FDI has to be friendly for both startups and investors. Investors need to have some assurance when they are putting money into India," Sharma said.
Later this year, the startup plans to launch one of its SSA satellites. With the help of data from these satellites, crowdsourcing data from other satellites, and their analytics platform called space-mission assurance platform (Space-MAP), Digantara intends to provide accurate situational data for its customers.
Earlier this year, the startup successfully launched its Pushan-Alpha satellite from a SpaceX rocket. In 2021 Digantara received seed funding of $2.5 Million from Kalaari Capital.
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