- News & Analysis
ContentsFeature: India’s shift from consumer to deeptech attracts a new wave of corporate investorsViews: Investor viewsStartups to watch: Indian startups to watchFeature: India’s booming spacetech sector offers opportunities for investorsFeature: Global investors line up for India’s EV explosion
Supported by
TDK Ventures
India’s shift from consumer to deeptech attracts a new wave of corporate investorsThe country’s hard tech startup sector is a magnet for investment despite an overall slowdown.
Startups and venture capital boomed in India over the past 10 years with big companies in the consumer and financial sectors — names like fintech company PayTM, ecommerce operator Flipkart, edtech company Byju’s — becoming not just unicorns with valuations of $1bn, but “decacorns” with valuations in the tens of billions.
The past year has taken some of the shine off that. Amid a general global slowdown in investment activity India has seen one of the sharpest falls, with new startup funding rounds in 2023 down 39% from the previous years.
But, say investors, the headline numbers don’t tell the whole story. Beneath the declines for investment in consumer-related startups, a new cohort of more science-based and industrial-focused startups — in areas like AI, energy and mobility — is starting to grow and attract investment.
“If you are in the traditional space of maybe payments or fintech, e-commerce or gaming or education, that’s where the struggle is,” says Siddharth Mehta, investment director for TDK Ventures’ India operations. “But here is no dearth of capital for a deeptech company raising capital, even at this point.
“But there is no dearth of capital for a deeptech company raising capital, even at this point.”
Siddharth Mehta, investment director for TDK Ventures’ India operations
“Consumer and fintech startups were the low-hanging fruits, which are naturally the first targets for entrepreneurs. But now we are turning to harder problems with the growth of deeptech startups,” says Rama Bethmangalkar, director at Qualcomm Ventures, and an investor in India since 2007.
The emerging deeptech companies are attracting a new group of industrial-focused corporate investors to India.
“India is building for the world,” says Rajiv Mukherjee, chief evangelist at Bangalore-based venture studio IncubateHub.
“Experimentation is happening in India, quick experimentation, for companies that may be headquartered in Europe or elsewhere. If a Daimler is trying to launch a car in Germany, they are solving their most difficult problems with startups in India. That’s something that we are clearly able to see,” he says.
“Initially, India was looked upon as a low-cost destination for companies to find talent, but it graduated to become an innovation hub,” he says.
IncubateHub works with corporations to help them find startups to invest in or partner with in India. Mukherjee says he now works with around 110 such corporates — partly from abroad and partly in India. Back in 2014, when he first set up IncubateHub, just four corporate investors were active in the Indian market.
Vinay Subramanian is seeing the same trend. Subramanian helped build one of the first a corporate venturing arm for Indian e-commerce group Flipkart in the early 2010s. Now an academic at Wharton Business School, he still advises people interested in entering the Indian market.
“A lot of people come to me from EV companies, battery management companies, and say they would like to allocate some capital and have a unit in India. That’s a conversation I’ve had with a number of people. In the last couple of years, it has mushroomed. I don’t know if they are deals, but certainly there are teams that are coming to India,” he says.
Growth of the Indian VC market
India’s startup growth was kicked off by a large government digitalisation project, starting in 2010, which involved, among other things, issuing of unique digital identification numbers to citizens. This opened up possibilities to bring financial services to people who had previously been unbanked. Fintech startups such as PayTM grew rapidly. There was also large appetite for educational tech among a population that in places lacked access to schools and teachers. Startups such as Byju’s saw exponential growth.
“Because of the digital infrastructure a lot of innovation happened in the financial domain. A lot of startups got built there. Then, the other sectors like CPG [consumer packaged goods], retail and mobility came into the fore,” says Mukherjee.
India began to see rapid growth in venture capital investment starting in 2013 and 2014. Startup funding rounds went to 1,504 at the peak of the market in 2022 from 79 in 2013. The total estimated dollar value of these VC funding rounds also grew multifold – up to a maximum of $25.77bn in 2021 from $423m in 2013. Even though funding declined last year — as it has done globally — VC activity was still higher in 2023 than it was in 2020, before the boom years.
The number of startups has grown more than 15-fold to more than 100,000, according to Invest India, an investment promotion organisation.
Corporate venture investors have also seen growth in numbers. They have gone from backing just 35 rounds in 2013 to taking part in 345 in 2021, falling back to 193 last year. In the early days, corporate venture investors were a key source of capital in a nascent market, says Subramanian.
“In the early stages we were standing for institutional VC because India didn’t yet have a lot of VC capital. 2012-13 was when the first startup boom happened. There was some capital, but I’d say there was a vacuum in institutional capital,” he says.
Corporate venture capital remains a fairly large part of the market. In the early days of India’s startup boom, corporatebacked funding rounds accounted for around 40% of half of all the fundraising deals. Even in 2023, they still accounted for 20% of all deals.
The corporate VC crowd has become diverse over time. Between 2013 and 2015, half or more of the corporate backers of Indian startups were foreign corporations, while only about 20% of the rounds featured Indian corporates only, as the GCV data suggest. Today, nearly a third of rounds feature domestic corporate backers only and another third foreign corporates only.
Now might be becoming an even better time to be a corporate investor in India, says Mukherjee.
Much like everywhere else globally, exits by VC investors have fallen in India in the past year. The 72 exits achieved in 2023 was a 33% drop from the peak of 2021, although it was still higher than levels seen prior to 2020.
But a more constrained VC market may leave more options open for corporate investors that still have capital to deploy.
“Corporate capital has been waiting patiently, just looking at VCs putting in money at crazy valuation. And now they will have the last laugh. Right now, there are many opportunities to acquire or put in money at the right valuation. The traditional VCs are losing out, but the CVCs will benefit,” Mukherjee says.
Shift to deeptech
Consumer sector startups still dominate the VC sector in India. Even in 2023 some 28% of all startup funding rounds went to consumer sector companies. IT services also makes up the bulk of rounds. But this is gradually starting to change.
When Mehta founded energy company Shell’s innovation hub in India in 2017-2018, there were barely any investors putting money into deeptech startups in India. It took him a year even to convince Shell to invest in its first startup in India.
“We were early flag bearers in climate and industrial tech,” he says. But after that first investment, further Shell deals came quickly, with the energy company investing in power plant builder Husk Power Systems, ride hailing app Rapido and industrial AI provider Detect Technologies. Oil major BP also came into the market in 2021, investing heavily in BluSmart, an electric vehicle ride hailing company, as well as in EV charging network Magenta. In 2022 Mehta moved to TDK Ventures, to help the Japan headquartered electronics company set up a unit in India.
Mehta says India’s strength in digitalisation has exciting applications for industrial companies. “Especially now with generative AI coming in, we can see industrial applications for that. This is one area where I’m super excited about the future of India.”
Electric mobility, batteries and hydrogen are also areas where Mehta says India is making rapid progress.
Last year TDK made its first foray into the Indian EV market by joining the series B round for battery company Exponent Energy. It also invested in Infinite Uptime, a Pune-based company that uses AI for remote predictive maintenance of industrial machinery.
Mehta and Bethmangalkar at Qualcomm are also watching for opportunities as India begins to build a homegrown semiconductor industry. This is an area that the government is keen to push and where India should have the required talent.
“We have tens of thousands of engineers who design semiconductors, but hardly any assembly, packaging or manufacturing companies,” says Bethmangalkar. Qualcomm Ventures recently invested in a small startup in the semiconductor sector, involved in the packaging and module making side. Belthmangalkar says the company’s products are being very well received in North America and Europe, in part because geopolitical tensions between China and the West are causing people to rethink their semiconductor supplier arrangements.
Indian semiconductor companies have the advantage of being less likely to be subject to sanctions by western governments.
To keep an even closer eye on deeptech innovatons coming out of India, TDK plans to open an innovation hub in partnership with the Indian Institute of Technology Madras, a public technical university located in Chennai.
“That a Japanese company is even thinking of putting up an incubation cell in a research institute like IIT Madras in India speaks volume of the kind of talent and skill they are seeing,” he says.
Financial VCs are also starting to catch up with the trend to invest in engineering and science-based companies in India.
“Now we have specialised financial VCs investing in deeptech companies. Sequoia invested in a battery recycling company and a hydrogen company. Then we have Indian VC firms, large ones, who are investing in new technologies. Some of them are really specialising in tech investing,” says Mehta.
What investors need to know about working in India
“India has a mind of its own,” says Parag Shah, who has been with the Mahindra Group, a car manufacturer, for more than 25 years. “You can’t assume that if it’s worked elsewhere it will work in India.”
Shah says investors coming into the Indian market need to understand its nuances. A two-level market operates in India – the urban market which makes up a small percentage of the large population and the semi-urban rural market. As an investor, finding consumers in a country with a population of 1.4 billion people is easy, but finding the target market involves an elegant strategy of “slicing and dicing” to find the right mix of digital and brick-and-mortar-focused startups.
Similarly, investors and entrepreneurs must take into account that premium prices do not have a place in the Indian market yet, one of the most important factors influencing choice is still the price of a product, with most seeking “best value”.
“The important thing is we should not map a Western thesis onto India,” says Mehta. India is good at very frugal innovation — you can probably achieve the same results with a third or a quarter of the capital you would need elsewhere for launching and testing a product in the market.
“What you can achieve in India for the same amount of money is so much more than you can in any other part of the world. For a third or a quarter of the capital you can get an excellent test bed for multiple solutions.”
But at the same time, because there is very little government support for research and development — in the way you might have in Europe or even the US — India is less likely to have startups that require long development periods before going to market.
Finding the good technology companies will also take time, says Subramanian. “You need patience. Let’s say you have an expectation to invest $50m of capital every year. It’s not going to happen overnight. You probably need to have your team on the ground for five to 10 years. You won’t just come in and find 100 good battery companies in Bangalore. It’s going to take time finding those diamonds in the rough.”
Investors who are coming to India for the first time, should also pay attention to “cultural alignment” says Shah. He believes Indian founders tend to be more “emotionally attached” to their business, and paying heed to that is important for collaboration.
Investor viewsRama Bethmangalkardirector, Qualcomm Ventures
Consumer and fintech startups were the low-hanging fruits, which are naturally the first targets for entrepreneurs. But now we are turning to harder problems with the growth of deeptech startups.
Siddarth Mehtainvestment director India, TDK Ventures
What you can achieve in India for the same amount of money is so much more than you can in any other part of the world. For a third or a quarter of the capital you can get an excellent test bed for multiple solutions.
Parag Shahmanaging partner, Mahindra Partners
India has a mind of its own. You can’t assume that if it’s worked elsewhere it will work in India.
Rajiv Mukherjeechief evangelist, IncubateHub
Initially, India was looked upon as a low-cost destination for companies to find talent, but it graduated to become an innovation hub.
Vinay SubramanianThe Wharton School
You need patience. Let’s say you have an expectation to invest $50m of capital every year. It’s not going to happen overnight. You probably need to have your team on the ground for five to 10 years.
Startups to watch1 of 12
ChargeUp
Founded: 2019
Based: New Delhi
Funding to date: N/AChargeUp provides rechargeable lithium-ion batteries and battery swapping services to e-rickshaw owners.
Satish Mittal, chief digital officer, and Ankur Madan, chief operations officer, founded ChargeUp in 2019. Mittal was the lead of mobile and connectivity partnerships at Meta for five years and was also the senior vice president of Vodafone for four years. Madan spent seven years at management services company Spectra where he held positions such as product consultant and head of business planning and product management.
ChargeUp’s total funding has not been disclosed. In 2022 it raised $7m in a debt and pre-series A1 round led by Capital-A, a Malaysian low-cost airline. Other investors include venture capital firm Anicut as well as angel investors Ekta Kapoor and Sachin Mehra.
2 of 12
Digantara
Founded: 2018
Based: Bengaluru
Funding to date: $12.5mDigantara specialises in space surveillance systems that provide predictive space-based situational awareness services. The company seeks to ensure the safety of space operations through its space situational awareness infrastructure, which assesses collision avoidance and space traffic.
The company provides real-time coverage through its cost-efficient nanosatellites that are in low earth orbit. It also builds maps for space by modelling through AI-based algorithms.
The startup was founded by chief executive Anirudh Sharma, chief operations officer Rahul Rawat and chief technology officer Tanveer Ahmed in 2018.
Digantara has raised $12.5m. In June 2023 it raised $10m in an all-equity series A1 round led by Peak XV Partners. Investors include Kalaari Capital, Campus Fund and Japanbased venture capital firm Global Brain.
3 of 12
Fasal
Founded: 2018
Based: Bengaluru
Funding to date: $17.7mFasal is a precision farming and IoT artificial-powered intelligence platform for horticulture crops. The company’s technology simplifies the process of cultivating crops by predicting ideal growth conditions and resource requirements such as irrigation and sprays and by notifying farmers to take informed decisions.
Fasal also provides a warning system that notifies farmers when they need to irrigate. Users can also receive disease and pest alerts as well as weather forecast updates. Anada Verman founded Fasal in 2018. He was also the company’s chief executive until 2022. Verman was a startup mentor for two years at Manush Labs and spent two years at IBM as a software engineer.
Since its launch, Fasal has raised $17.7m. In December 2023 it raised $12m in a funding round led by TDK Ventures and the British International Investment firm. Corporate investor Genting Ventures also participated.
4 of 12
Fruvetech
Founded: 2021
Based: New Dehli
Funding to date: N/AFruvetech develops a refrigeration-less, lowcost storage device that helps to maintain the shelf life of fruits and vegetables throughout the supply chain. The company’s technology protects fresh produce from spoilage and retains texture and vitamin content.
The Indian Institute of Technology Delhi spinout was founded by non-executive director Jagadis Gupta Kapuganti in 2021. Kapuganti is a scientist at the National Institute of Plant Genome Research where he has worked for nine years.
Fruvetech’s has yet to raise any funding rounds and has no angel or institutional investors. The company’s work is supported by a grant from the Biotechnology Industry Assistance Council. The company is being incubated by the Indian Institute of Technology Dehli.
5 of 12
FutureCure Health
Founded: 2019
Based: Jaipur
Funding to date: $5.06mFutureCure Health develops technologies to help patients who suffer from migraines and other chronic diseases. The startup develops wearable neuromodulation and biofeedback device technologies to diagnose and treat migraines and dizziness.
FutureCure is also setting up specialised migraine clinics that provide detailed evaluation and treatment options and are run by neurologists and psychologists. The company’s app provides cognitive behavioural therapy to help reduce hypersensitivity associated with migraines.
Neurologist Anita Bhandari and angel investor Rajneesh Bandari founded
FutureCure Health in 2019. FutureCure has raised $5m. In 2022 it raised $4m in a series A round led by RVCF India Growth Fund. Other investors include venture capital firms Unicorn India Ventures and Kotak Investment Advisors.
6 of 12
Landeed
Founded: 2022
Based: Bengaluru
Funding to date: $10.8mLandeed provides certificate application technology to help digitise land records. The online platform provides a search engine for real state owners, agents, developers and legal advisors to search for property titles.
The application helps users check transaction history and property market prices and share documents with stakeholders to help value property.
ZJ Lin, chief production officer, Sanjay Mandava, chief executive, and Johnathan Richards founded Landeed in 2018. Mandava is an angel investor for multiple startups such as Raven, Bunting Labs and Maverick Bioworks. He also founded a Y-Combinatorbacked company called GoLorry.
Landeed is backed by Y-Combinator and has raised $10.8m. In 2023 the startup raised $8.3m in a round led by Draper Associates and which saw participation from Bayhouse Capital.
7 of 12
Mindgrove
Founded: 2021
Based: Chennai
Funding to date: $2.35mMindgrove designs scalable system-on-chips, which are built to be power efficient and cost effective and are used in IoT, defence and automobile sectors. The company aims to provide best-in-class performance with lower energy costs.
Mindgrove’s also offers hardware-accelerated encryption to keep data safe. Other products include Vision SOC, which connects up to four cameras simultaneously and has a high speed, quad core vision data acquisition and processing system.
The startup was founded by chief executive Shashwath T.R and chief technology officer Sharan Jagathrakshakan in 2021. Both were software engineers at Lucid Software before co-founding Mindgrove.
In 2023 Mindgrove raised $2.32m in a seed funding round led by venture capital firm Sequoia Capital India.
8 of 12
Oro Money
Founded: 2020
Based: Chennai
Funding to date: $12.5mOro Money is an online marketplace for loans that takes users’ gold as collateral. In addition to offering loans against gold deposits, Oro Money provides lockers to store gold.
Oro Money was founded by Parth Shah and Rakesh Man in 2020. Shah was the merchant lead at Dunzo, an online grocery shopping app. He has founded other startups including Genie Solutions Private and Instadel. Mani was the project head for three years at Becoming Foundation, a youth-led organisation, for three years.
The startup raised $12.5m in October 2023. Investors in the round include venture capital firms such as Singularity Ventures, Three State Capital, 021 Capital and PI Opportunities Fund, a vintage expansion fund managed by Premji Invest. Angel investor Siddhartha Sacheti also provided funding.
9 of 12
Rightbot
Founded: 2020
Based: Bengaluru
Funding to date: $6.8mRightbot is an AI-driven robotics platform that supports warehouse automation. The company creates bin-picking autonomous mobile robots, which can fulfill orders and replenish inventory.
Founded in 2020, Rightbot’s founders Anurag Dutta, CEO, and Abhinav Warrier, chief technology officer, aim to attract companies that want increasingly fast deployment of robots without making changes to infrastructure. Dutta was the director and member of the leadership team at Carslberg India for four years and was the executive assistant at CK Birla Group for nearly two years.
Rightbot has raised $6.8m. In December 2023 it raised $6.3m in a series A round with investors including Amazon Industrial Innovation Fund, a corporate venture fund of US-based e-commerce conglomerate Amazon. Other investors include e-commerce platform Flipkart and venture capital firms SOSV and Entrepreneur First.
10 of 12
Sarvam AI
Founded: 2023
Based: Bengaluru
Funding to date: $42mSarvam AI develops efficient large language models for India’s diverse linguistic culture. It enables new GenAI applications through bespoke enterprise models. The large language models also use voice as the default interface to help support local languages and cater to Indian market requirements.
The startup was founded by Raghavan Kumar and Pratyush Kumar in 2023. Raghavan cofounded other startups including Stealth Startup and was the chief AI evangelist at EkStep Foundation for three years. Kumar was a researcher at Microsoft for two years before cofounding another startup called AI4Bharat.
In December 2023 Sarvam AI came out of stealth mode after five months and raised $41m in a series A and seed round. The rounds were led by venture capital firms Lightspeed Ventures, Peak XV Partners and saw participation from Khosla Ventures.
11 of 12
Super API
Founded: 2022
Based: Bengaluru
Funding to date: $500,000Super API is a programmable application programmable interface (API) gateway that makes customers’ APIs cacheable. This reduces the response time by ten times. The startup specialises in converting gateway requests into cacheable data, which allows clients to cache their critical APIs without spending time rewriting their code.
Founded in 2022, Super API was launched by Adithya Kavauluru and Aditya Agrawl. Kavauluru spent four years at US-based software development company Fyle as the director of engineering. He also cofounded other companies such as Turnaround Systems and 101Kitchens.
SuperAPI was selected by the Y Combinator Winter 2023 Cohort programme. It received $500,000 in a seed funding round from the accelerator programme. The startup has not received any funding from corporate investors
12 of 12
Zerund
Founded: 2018
Based: Guwahati
Funding to date: $980,000Construction startup Zerund develops lightweight bricks that contain plastic. The cost efficient, earthquake- and fire-resistant bricks are also made from other waste materials and ingredients that produce no greenhouse gas emissions and are non-toxic.
The bricks are strong, have low water absorption and are well insulated. The startup has sold more than four million units and has more than 2,500 customers.
Zerund was founded by Rupam Choudhury, Mousum Talukdar and David Pratim Gogoi in 2018. The trio all serve as the startup’s directors. Choudhury and Talukdar have bachelor’s degrees in civil engineering from Assam Engineering College.
In 2022 it raised $938,372 in a seed round from Dreamweaver Investments. Investors include venture capital firms Anthill Ventures, Gruhas, Northeast Venture Fund.
India’s booming spacetech sector offers opportunities for investors
India has followed NASA’s lead in opening space businesses to private investment, and the country now has more than 140 spacetech startups.
In August 2023, India joined an elite club of nations that has succeeded in landing a spacecraft on the moon, after the US, the former Soviet Union and China. The groundbreaking Chandrayaan-3 moon landing came just after the successful launch of Mars Orbiter Mission (Mangalyaan-1), and has been recently followed by the Aditya-L1 solar observation mission.
India has been successful where US space agency NASA’s recent moon mission failed, a clear sign that India’s rapidly expanding spacetech industry is coming into its own now.
It is certainly attracting attention from investors. Last year in June, Bengaluru-based spacetech startup Pixxel raised $36m funding from Google, Radical Ventures, Lightspeed, and others. Similarly, Chennai-based spacetech startup Agnikul Cosmos secured $26.7m for a series B funding round in October 2023. Another spacetech startup SatSure netted $15m in its series A round led by Promus Ventures, Baring Private Equity Partners, others in August 2023.
According to Tracxn, a private market data intelligence platform, India’s spacetech startups raised just $35m between 2010 and 2019. Then in 2020, funding grew to $28m, rising to $96m in 2021 and $112m in 2022.
In total, investment in Indian spacetech startups increased to $124.7m in 2023, according to Dr. Jitendra Singh, minister of state for science and technology, India, and the country’s space economy is expected to grow from $8.4bn to $44bn by 2033.
“This growth can be attributed to a confluence of factors, including macro sectoral tailwinds, increased private sector participation, and strong support from the Indian Space Research Organisation (ISRO), says Arjun Rao, founding partner at Bengaluru-based early-stage venture capital firm Speciale Invest.
Many of the same developments that have pushed the spacetech ahead globally are at work in India, too, such as decreased launch costs, increased demand for satellite technology and development of allied technologies. A robust spacetech vendor base and supply chain also contributed to the growth story, says Rao.
What makes India particularly exciting in spacetech developments, however, say industry observers, is that the country has a history of lower-cost development, which could help bring down the cost of space launches and space exploration even further.
India’s space journey
India embarked on an audacious space adventure early with the establishment of the Indian National Committee for Space Research (INCOSPAR) in 1962 and subsequently, the country launched its first rocket in November 1963.
In 1969 INCOSPAR transformed into what is popularly known today as ISRO and carried out some of the path-breaking and historical developments in the space technology sector over the following decades. It launched India’s first satellite ‘Aryabhata’ in 1975 and ‘Rohini Satellite RS-1’ in 1980.
The country began its first space mission in 1984. And later, with the advent of technological innovations, ISRO launched more than 100 space missions over the years and is ranked among the list of top six international space organisations in the world.
In 2020, India’s spacetech sector began to see more of private players making their way in the industry, resulting in massive investments in the sector.
Government players previously dominated India’s spacetech industry, but under a policy drive by Prime Minister Narendra Modi, India is following NASA’s lead in opening other space businesses to private investment. More than 140 spacetech startups have now been launched in India.
Awais Ahmed, CEO at spacetech startup Pixxel, says a demand for higher bandwidth and lower latency for data communications is pushing forward the satellite and rocket sectors.
“Better and more unique datasets such as hyperspectral, thermal, and synthetic aperture radar (SAR) will see higher growth than multispectral/RGB imaging. Soon, we will see more and more Indian space startups enter the market and become space-proven,” he adds.
Echoing the similar stance, Anirudh A Damani, managing partner at Artha Venture Fund, said India’s spacetech sector is brimming with innovations across various aspects of space exploration. Innovations range from 3D printing of rocket engines, as seen with Agnikul Cosmos, to advanced earth imaging technologies like hyperspectral sensors developed by Pixxel.
“Additionally, India’s ability to offer lower-cost solutions makes her an appealing partner for countries like Gulf nations, Bangladesh and Nepal seeking space access. India’s spacetech industry isn’t just competing; it’s leading in many aspects, setting the stage for a dynamic presence in the global market,” he adds.
What does India’s spacetech ecosystem offers investors?
There are still many macro areas open for investment in Indian spacetech, says Vasant Rao, managing partner at Shastra VC. Launch vehicles, synthetic aperture radar (SAR), ground segment infrastructure, space data analytics, and software are among the sizeable opportunities, he says. Despite the highrisk nature of the sector there is potential for outsized returns for patient capital.
“From an investor’s perspective, the spacetech sector in India presents a compelling opportunity. The estimated market opportunity is projected to grow from $8bn to over $25bn by 2030, indicating a significant hockey stick growth curve. For institutional investors, both upstream and downstream segments offer attractive investment avenues,” he adds.
Some 100 spacetech startups registered with ISRO in the past one to two years, and in January 2023, Microsoft partnered with ISRO to help spur growth in India’s spacetech startups ecosystem.
Aside from Microsoft, not many corporate investors have yet become involved with the Indian spacetech sector, but Dr. Somdutta Singh, founder and CEO at Assiduus Global Inc, LP Angel Investor, feels corporations should consider the sector. Collaborating early with emerging spacetech startups can provide companies with a distinct advantage and an early foothold in this burgeoning sector.
Challenges ahead
One of the major challenges that spacetech startups face is lack of appetite by local investors, especially for scale-up rounds. Pixxel’s CEO Awais said there is a lack of late-stage and growth-stage investors based in India investing in this space. All large rounds in the private spacetech startups have so far been led by foreign funds.
At the same time, early-stage funding can be difficult to find, too.
“Today, access to grants and revenue and contract mechanisms for early-stage startups remains a big challenge, as compared to the US or Europe,” Awais says.
Indian policymakers, however, approved the ‘Indian Space Policy 2023’, which aims to enhance the industry by inviting the participation from non-government bodies to further boost the space economy.
Pawan Chandna, cofounder and CEO at spactech startup Skyroot Aeropsace, says the new space policy, which includes plan to liberalise foreign direct investment in the space sector, provides a direction and vision for the industry.
“However, the implementation of these policies may encounter initial challenges, given the newness of the sector,” he says.
Neha Singh, cofounder and CEO at Tracxn, concurs that a lot of opportunities have opened up for the sector in India after the announcement of IN-SPACe in 2020. The government also supported the space industry with the recent announcement of a goods and services tax (GST) exemption for satellite launches by private companies.
However, Neha says that space tech companies may still struggle to gain investor confidence, given that they are expensive and time-consuming to develop. Another blocker could be a limited talent pool.
India’s spacetech trajectory
Skyroot CEO Pawan says India’s spacetech industry is aiming to secure a $100bn share of the projected $1tn global space industry by 2040. The collaboration between the private sector and government entities like ISRO plays a pivotal role in advancing various facets of the sector, spanning manufacturing, launch services and downstream activities.
Prateep Basu, cofounder and CEO at KaleidEO (A SatSure Company), says that innovation like large swath-high resolution with edge computing on-board, low-cost launch facilities, and SAR imaging will position India on a global map of the space economy in the coming years. Also, it will be the Indian space sector’s time of ‘collaborative growth.’
“In the next 5-10 years, India’s spacetech industry will be a key driver of pride and power that will enable India to partner and negotiate with the world’s significant economies,” he adds.
Global investors line up for India’s EV explosion
Ambitious adoption targets and government incentives have positioned India’s electric mobility sector for rapid growth.
Some of the biggest corporate venturing deals in India last year were funding rounds for electric vehicle startups. BP made two investments into BluSmart Mobility, an EV-only ride-hailing company that has now raised more than $97m, as well as EV delivery company Magenta. Toyota backed an early-stage round for electric vehicle maker River.
Why has there been such a scramble for large global corporations to get involved in the Indian electric vehicle market?
India has been relatively late in adopting electric vehicles, with 0.1% of total vehicle in the country electrified so far. EVs sales comprised for just 1.3% of total vehicles sales in India during the 2020-21. But the country is poised on the brink of an explosion of adoption. The Indian government has set a target of having 30% electric vehicle adoption by 2030 and has announced various policies and incentive schemes to get there.
“These include subsidies, tax incentives, and grants for EV manufacturers, and the implementation of stricter emission norms. Such support provides a conducive environment for investment in the EV sector,” says Bhaskar Majumdar, founder and managing partner at Unicorn India Ventures, a Mumbaibased VC fund. “The EV sector in India is viewed as a potential market with significant growth opportunities by investors.”
A two-wheel revolution
India is the 3rd largest automotive market in the world in terms of sales, ahead of both Japan and Germany. A switch to electric vehicles, therefore, opens up potential for sales on a grand scale.
“This large market size provides the potential for significant return on investment (ROI),” says Majumdar. Two-wheel vehicles like motorbikes, scooters and mopeds dominate the market in India. Despite being the world’s 5th largest economy, two-wheel vehicles have much higher demand in India than cars. This comes mainly due to the low personal income and under-developed infrastructure that contributes to the two-wheel vehicles being the preferred choice for many.
According to a report by Bain & Company, the India’s EV market is expected to see 40%–45% EV adoption for twowheel vehicles and 15%–20% for four-wheel passenger vehicles by 2030, with 12 million to 13 million new two-wheel EVs and 1 million new four-wheel passenger vehicles being sold in India annually by 2030.
According to the Economic Survey 2023, India’s domestic EV market is set to register 49% compound annual growth rate (CAGR) between 2022 and 2030, with the sales touching 10 million annually by 2030.
Kalyan C Korimerla, managing director and co-promoter at Hyderabad-based EV-maker Etrio, says EV industry growth will come from number of ectors, from improved battery technologies to vehicle-to-grid technology.
Korimerla notes that the biggest investments so far has been into EV manufacturers, fast-charging battery and infrastructure providers, EV as a service and EV fleet aggregators. In addition, companies offering innovative EV financing solutions have also raised capital from investors.
“India’s EV market is still nascent and emerging but has huge potential. The government policies and operating economics are driving EV adoption at scale. This requires significant investments from both private and public sectors,” he says.
Indian government incentives for EVs
India’s central and state governments have launched lucrative incentives for customers to adopt EVs and suppliers to push domestic production and network build-out.
1. Faster Adoption and Manufacturing of Electric Vehicles (FAME): This scheme provides consumer incentives for various kinds of vehicles along with Phased Manufacturing Plan (PMP) to support domestic EV manufacturing. In its most recent iteration, FAME II has allocated $1.1 bn in demand-led incentives, notably trimming down the capex gap vs. internal combustion engine (ICE) for consumers while encouraging adoption. For the installation and operation of the charging infrastructure, an additional $200m has been allocated.
2. Production-linked incentive (PLI) schemes: This has been launched by the central government for advanced chemistry cell battery storage to drive local cell manufacturing.
3. Goods and Services Tax (GST) rate cuts and road tax waivers: It is supplemented by state-level financial assistance and direct investments in electrifying fleets and setting up charging infrastructure.
”The combination of government initiatives, environmental concerns, and technological advancements has set the stage for a remarkable transformation in India’s transportation industry,” says Pravin Kumar, co-founder at Pune-based E Mobility charging solution goEgoNetwork.
“The National Electric Mobility Mission Plan (NEMMP) highlighted the government’s commitment to EV adoption and supporting infrastructure development. Additionally, the government’s announcement of installing 69,000 charging stations across the country by 2025 is a significant step towards facilitating the widespread adoption of EVs.”
Potential roadblocks
Despite government assistance, roadblocks still exist for the adoption of electric cars.
Sushant Kumar, the founder and managing director of Noida-based electric bike manufacturer AMO Mobility, says electric mobility companies still have work hard to sell the concept to clients.
“We need to work on product awareness; efforts should be made to educate the public about the benefits and features of electric vehicles along with the ease of adoption across the country,” he says.
While the government may be motivated to back electric vehicles in order to meet global sustainability goals, individual customers will need to be convinced that EVs offer advantages over internal combustion engines, says Jayapradeep V, chief business officer at Tamil Nadu-based E-bike startup Raptee Motors.
“The major shift will happen only when more people actually ride and experience well designed EVs and understand how EVs can be an upgrade to gas powered vehicles.”
“As far consumers are concerned sustainability will be de facto and therefore the consumer expectations will be in terms of the superior drive/ride, performance and the cost of ownership.”
Building out a network with enough charging points is also a key challenge.
“The lack of sufficient charging infrastructure, dependency on neighbouring countries for imports, supply chain disruption, and indigenization of EV components are some of areas that need to be tackled wisely,” says Akshay Singhal, founder and CEO at Bangalore-based nanotechnology firm Log9 Materials.
Investors may also be wary of changes to government policy on EV incentives, says Ankur Mittal, partner, at Physis Capital, the venture capital arm of angel network Inflection Point Ventures (IPV).
“Certainly, the EV industry in India has witnessed a potential shift with the launch of several government policies. However, any alterations in policies, subsidies, or tax incentives can bring some amount of uncertainty for investors. Technological risk is another concern, as EV sector is known for its swift technological progress, and investing in emerging technologies entails inherent risks,” he says.
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