India’s deep-tech sector has seen significant growth over the last decade, yet investment needs to find its way to the sector, according to Pranav Pai, Founding Partner & Chief Investment Officer of 3one4 Capital.
On March 6, Bengaluru-based early-stage venture capital firm 3one4 Capital released its latest report, highlighting how deep-tech innovation has traditionally been concentrated in Silicon Valley, Israel, and China. However, India is undergoing a structural shift from a software-driven tech ecosystem to one rooted in first-principles deep-tech innovation.
“So we need government to announce schemes and give universities permission and money to do any of this research and tell them this is a priority now,” Pai told Moneycontrol.
Deep tech, also referred to as frontier tech, broadly means intellectual property (IP)-driven innovation, where companies—whether startups, labs, or large corporations—invest in R&D to develop unique IP, spanning AI, software, semiconductor design, or advanced processes like EV fast charging.
Nevertheless, Pai lauded the government of India for exploring setting up a dedicated Fund of Funds (FoF) for DeepTech startups and companies in the Union Budget 2025 on February 1.
Finance Minister Nirmala Sitharaman announced that around 10,000 fellowships will be provided in IITs and IISc for tech research in the next 5 years to support the next generation of companies. The announcement also includes around Rs 20,000 crores of investment to drive private sector innovation.
Pai further said that in 2015-16, the ecosystem barely existed. However, over the last decade, the scenario has changed significantly. “They're taking deep tech seriously. The first time it's been mentioned in the Budget,” Pai added.
The Frontier Tech 2025 report from 3one4 Capital urges support for the deep-tech space's long development cycles and high infrastructure needs, adding that India requires more ‘patient capital’ from both private and government stakeholders.
“A substantial expansion of Funds-of-Funds (FoFs) is essential to align with India’s vast population, growing economy, and ambitious startup ecosystem,” the report read.
Pai further stressed the importance of sustained capital flow into sectors such as artificial intelligence (AI), clean mobility, and semiconductors. “We are seeing all the universities now have accelerators. All of them are encouraging their professors to take leave, go take some patent, make a business out of it,” he said.
Giving an example of Indian deep-tech startups, Pai said companies like Dozee, Exponent Energy, and AGNIT Semiconductors have done well in their respective domains.
“Dozee now has a De Novo FDA approval, which means the US FDA for the first time in the world has given a full FDA approval to a new technology of this kind,” he said. Exponent Energy, another portfolio company, has developed the first system in the world to fast-charge an entire bus in just 15 minutes.
Additionally, AGNIT Semiconductors has come out with GaN (Gallium Nitride)-based chips in India, built by IISc professors and researchers with dozens of patents.
Pai believes deep-tech investment in India still needs to catch up. “For deep-tech expertise, 10 years back, you would always wait for someone to come back from outside India. That was the unfortunate situation back then. Today, we are getting a lot of talent from India itself,” he said, adding that India must continue building indigenous capabilities in AI, semiconductors, and quantum computing.
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