India Can Build Rockets, But Can Its VCs Fund The Next One?

On July 18, 2026, Skyroot Aerospace made history by successfully launching its Vikram-1 rocket into orbit, marking the first time a privately developed Indian rocket achieved an orbital launch. This achievement demonstrated the technological capabilities of Indian entrepreneurs, challenging the notion that India's space program was solely dominated by ISRO.

However, journalist Ashlee Vance questioned why Indian venture capitalists (VCs) were hesitant to take risks and generate profits. After meeting 15 Indian companies, Vance expressed disappointment in the state of India's venture capital ecosystem. Founders complained about investors demanding commercial traction before technologies were validated, lengthy due diligence processes, and excessive reliance on founder pedigree.

Investors defended their approach, citing India's growing list of deep tech successes, increasing availability of specialized capital, and structural challenges in financing scientific innovation. However, the timing of this debate is particularly significant as AI threatens to automate parts of India's software-services industry, making the ability to create and own foundational technologies crucial.

Indian founders are not only questioning capital but also the venture capital firms themselves. Akash Kulgod, founder of Dognosis, a company developing canine-assisted cancer detection technology, shared his experience with 80 investors, around 65% of whom were based in the US. Kulgod criticized US investors for quickly rejecting opportunities when they lacked confidence in the technology or founding team.

In contrast, Indian investors were alleged to extend discussions over multiple meetings and visits before demanding commercial traction or disappearing altogether. Kulgod questioned whether some investors had the technical understanding necessary to evaluate unfamiliar scientific problems. Other founders raised concerns about investors relying on educational credentials, professional networks, and reputations of existing backers when evaluating early-stage startups.

While these are individual accounts, they highlight a deeper question: if investors require commercial traction, institutional validation, and the backing of another investor before writing a check, how much technological risk are they actually assuming? The funding landscape in India's deeptech sector shows a significant surge in funding, with Indian deeptech startups raising approximately $500 Mn across 87 deals in 2025.

However, the number of funded deals actually declined, with Pixxel's $100 Mn funding round accounting for nearly one-third of the total capital deployed in the quarter. Bengaluru received the majority of the sector's funding, accounting for around 65%. While headline funding growth may seem impressive, it doesn't necessarily reflect the accessibility of capital.

Larger investments are increasingly flowing towards a smaller pool of technically validated companies, leaving many promising startups struggling to secure funding.