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India's DeepTech Dawn: Forging Ahead

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Indian DeepTech startup landscape is expanding rapidly, with startups leveraging advanced technologies like AI, Blockchain, IoT, and Robotics among others to not only transform industrial processes, but also solve major social and economic issues. Despite a sharp decline in funding in 2023, the Indian DeepTech startup ecosystem continued to see a lot of activity including new startup emergence across both established and emerging hubs, collaborations & partnerships, patents etc. While Indian DeepTech startups are making significant strides, they need more support to thrive and compete globally.

This study, India's DeepTech Dawn: Forging Ahead, provides readers with insights into funding trends, innovation hotspots, collaboration trends, and areas in which Indian DeepTech startups need support, thus helping stakeholders understand the landscape better and take informed decisions.

Key Findings

CY2022 - A Year of Mixed Outcomes

Cumulative global VC investments in DeepTech startups reached $590 Bn in CY 2023
  • Post-pandemic surge in digital transformation, overall increase in focus on deep technologies, and the generative AI boom in 2023, all contributed to this ~3X growth in investments
  • While BFSI and Industrial & Manufacturing sectors continue to be the top 2 sectors with respect to funding in DeepTech startups, post-pandemic push to DeepTech could majorly be seen across sectors like cybersecurity and Environment Tech.
Indian DeepTech ecosystem ranks 6th globally
  • Despite having the third largest pool of DeepTech startups in the world (excl. China), India lacks patient capital for DeepTech startups which limits their ability to scale
  • In comparison to other major DeepTech startup ecosystems in the world, median ticket size across Indian DeepTech startups remains the lowest
  • Although talent strength (in terms of number of individuals) is high in India, the enabling or supporting ecosystem for the Indian DeepTech startups needs improvement
Number of new DeepTech startups in India grew by ~2X in 2023 over 2022
  • While the number of new DeepTech startups saw a 2X increase in 2023, the number of new inventive DeepTech startups grew by ~3X during the same period
  • The number of new DeepTech startups in emerging hubs also grew by ~2X in 2023, reaching its 5-year high
  • Funding in Indian DeepTech startups declined by ~77% in 2023, with early and late stage bearing the brunt
  • AI-backed DeepTech startups showed resilience with 86% of such startups raising funding in 2023.
  • 70% of the incubators/accelerators, across top 50 Indian universities, are focusing on DeepTech, with majority drawing support from large corporations and focusing on AI and IoT
  • AI and IoT together account for 50% of the patent filings by Indian DeepTech startups
Availability of patient capital remains a key challenge for the ecosystem
  • While majority of the DeepTech startups reported lack of funding for scaling as the biggest challenge, a large share of the VCs reported long gestation periods associated with DeepTech ventures as a major factor making it difficult for them to invest in DeepTech startups.
  • Hence, majority of the startups are seeking grants/access to regulatory sandboxes to prototype and test, while majority of the VCs require the government to establish co-investment programs for DeepTech.
  • Nasscom recommendation to the government is to identify and strengthen innovation clusters, facilities availability of patient capital and robust compute infrastructure, fast track the implementation of the National DeepTech Startup policy (NDTSP), improve the IP framework, and strengthen the overall supplier ecosystem.

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