India's space tech revolution could mirror the IT sector: Inflexor Ventures' Jatin Desai

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India’s space tech industry needs some big initial successes to fuel its growth although it has the basic ingredients, such as government backing and investor interest, in place, says Jatin Desai, managing director of Inflexor Ventures.

“I think, just like in the IT revolution that happened in the 80s, and 90s, all the ingredients are in place for a huge push for space tech,” Desai said in an interview while stressing the need for a “couple of success stories” to give the industry a push.

Inflexor is a venture capital firm concentrating on investing in deep tech startups. It is an early-stage investor in Bengaluru-based Bellatrix Aerospace, which specialises in manufacturing propulsion systems and rockets.

The space sector is divided into two complementary segments. The segment that makes and sends objects -- satellites, probes, rovers and so on -- into outer space is the upstream sector and the segment that uses these objects to deliver products and services on earth for largely commercial, but also environmental and scientific, purposes is the downstream.

While the upstream part is more capital-intensive, in the downstream side, commercialisation cycles are much shorter.

“So, we see opportunities both upstream and downstream,” said Desai.

Inflexor's bets

On the rationale behind betting on an upstream player like Bellatrix Aerospace, Desai said: “The inherent nature of deep tech investments, especially when we do early stage, we understand that patience and multiple rounds will be required.”

“So, usually we make a bet on the founding team, the market potential, and very importantly, the tech that the startup created. I think it's a combination of these three, and we generally have a five-to-six-year horizon,” he said.

Inflexor Ventures, being an early-stage VC firm, has not paused investments despite the funding winter confronting start-ups amid turmoil caused by accelerating inflation, rising interest rates and the war in Europe.

Desai said around three space tech startups are on the firm’s watchlist, and added that he wanted to see some progress on their part before taking a call on funding them.

Government push

The space tech ecosystem is being actively guided by the Indian Space Research Organisation (ISRO) in terms of providing opportunities and access to technologies to start-ups.

The government is finalizing Space Policy 2022 and recently opened inSpace, an independent agency under the Department of Space for allowing space activities and access to government facilities to private sector entities.

Several space tech startups such as Astrogate are in the process of raising funding.

Desai stressed the need for startups to keep cash burn and capital expenditure low in the current market situation.

His advice to space tech startups looking for investment is that they build products that have commercial value.

“Otherwise, some of these things tend to be perpetual R&D projects and that is not obviously appealing to investors. And now investors also know quite a bit about space, than they knew three, four years back,” he added.