Deeptech startups gain VC attention as India’s investment landscape evolves

India's deeptech startup sector is attracting increased attention from venture capitalists (VCs), with themes such as technological sovereignty, import substitution, AI infrastructure and advanced manufacturing now considered key investment opportunities. In the past, deeptech ventures struggled to secure funding due to high risks and lengthy development timelines, but this landscape is changing.

During a panel discussion at TechSparks 2026, several industry experts offered insights into the evolving investment landscape in India, particularly in AI and deeptech. Priyanka Agarwal Chopra, Managing Partner and CEO of IIMA Ventures, highlighted that early-stage funding for deeptech ventures has traditionally been scarce due to the segment's inherent risks and longer gestation periods.

However, she noted that attitudes towards investing in deeptech at the pre-seed stage have shifted, with more funds willing to back these innovative companies. Two key trends driving deeptech innovation in India are technological sovereignty and import substitution, as companies seek to build indigenous technology capabilities and address domestic needs while expanding into global markets.

Anaina Malik, Partner at VU Venture Partners, emphasized the growing importance of AI infrastructure as India expands its AI application ecosystem. She stressed that infrastructure development should receive equal attention alongside application-led innovation, and that the boundaries between domestic and global markets are blurring, with international capital increasingly interested in Indian deeptech opportunities.

Sandeep Sinha, Co-founder and Co-CEO of Oister Global, pointed out that India's deeptech ecosystem has matured significantly, with many companies having addressed technology and R&D risks and achieved commercial success. Investors are now more focused on revenue growth, margin expansion and market expansion for deeptech ventures.

While acknowledging a somewhat fragmented funding ecosystem, Sinha described the current activity as "chaos by design," attributing the increased investor movement over the past 18-24 months to the sector's rising prominence. The panelists also highlighted the critical role of founder capabilities in investment decisions, particularly at the early stages when financial and operational data are limited.

IIMA Ventures prioritizes four key parameters for early-stage investments: founder depth, problem fit, unique insight of the entrepreneur and market opportunity. Sinha emphasized the need for founders to build predictable businesses and diversify their customer base to reduce reliance on a single customer. Despite the growing focus on AI and deeptech, Chopra cautioned entrepreneurs not to overlook opportunities in other sectors, such as consumer businesses, fintech and retail, which continue to offer substantial prospects supported by strong domestic demand.

She encouraged founders to pursue their passions and recognize that India's startup ecosystem has ample room for diverse business models and sectors.