Deeptech startup funding nears 2025 levels as VC conviction strengthens - Mint

India's deeptech sector raised $1.1 billion in equity funding as of June 1, compared with $1.4 billion raised last year, according to data from startup intelligence platform Tracxn.

The shift suggests India's venture capital firms are moving beyond treating deeptech as an experimental category. Investors are increasingly willing to back startups at earlier stages with larger amounts of capital, betting that government support, defence spending, AI adoption and manufacturing incentives could create globally competitive technology companies from India.

Over half the capital raised this year went to artificial intelligence cloud acceleration systems provider Neysa, which raised $600 million in equity in its Series B round in February, led by Blackstone. While Neysa might be a standout, Series A cheques also got significantly larger, with investors willing to put in upwards of $20 million into deeptech startups.

Deccan AI raised $25 million, AI cloud platform startup Nava raised $22 million, electric motorcycle manufacturer Zeno raised $20.5 million and spacetech startup Bellatrix Aerospace raised $20 million, according to Tracxn.

Notably, only 104 deals have been completed so far compared with 334 deals in 2025. It's an indication that VCs have turned selective about the kind of companies they back. Dealmaking and funding had peaked back in 2024, when the sector raised $1.6 billion, across 481 deals.

Vishesh Rajaram of long-time deeptech venture firm Speciale Invest attributes the rise in capital allocations to a few reasons, chief among them being the government's announcement of the ₹1 lakh crore Research, Development and Innovation (RDI) Scheme.

“More entrepreneurs are coming out to build. The sovereign nature of deeptech is creating a stronger pull for these technologies to come into existence,” Rajaram said.

Top 10 deals

The nature of capital deployment is visible when comparing allocations to the top 10 deals in the sector between last year and this year. In 2025, only three of the 10 largest deals were into Series A companies, compared with seven so far this year. The majority of the deals in 2025 went to companies at the Series B level of funding and beyond.

Even the largest deal from last year, which was Uniphore's $260 million round co-led by Nvidia, Snowflake and Databricks, was outsized by Neysa's round this year. Venture firms are eager to tap the sector, realizing that the outcomes can be large even if they're highly risky bets.

Nandan Nilekani-backed Fundamentum, which has traditionally invested in consumer tech, fintech and business-to-business software-as-a-service, is raising a ₹3,000 crore deeptech and consumer AI-focused fund. Co-founder Ashish Kumar has roped in Debraj Banerjee, former senior fund manager at Small Industries Development Bank of India Venture Capital Ltd, to lead deeptech investments at the new fund.

Funds that have previously shied away from deeptech have been evaluating the sector. Early-stage firm Stellaris Venture Partners is spending 25% of its time evaluating the sector and has seen deal flow grow 5x over the past two years. The firm is evaluating companies in space, defence, robotics, and advanced manufacturing.

“What sets this apart from a cyclical trend is the foundation of world-class talent, growing risk capital, genuine technology innovation, and a government that’s accelerating the journey from prototyping to proof points through early orders and grants,” said Rahul Chowdhri, partner at Stellaris VP.

Business and funding boost

For startups in the sector that have been able to prove that their technology works and they can achieve scale, there's no dearth of inbound interest from investors.

Drone delivery startup Airbound, backed by Lightspeed and IIMA Ventures, is raising a fresh round of funding which is expected to close upwards of $30 million, according to a person familiar with the matter.

Earlier this year, Airbound began a pilot programme for Narayana Health that uses drones to transport diagnostic samples and blood bags. Company founder Naman Pushp said that their ability to showcase real world impact has driven both business and funding into the venture.

“Most drone companies in India talk about what they're going to do. This is the first time a customer has actually spoken about the impact that's already been created and how they want to scale,” Pushp said.

GrowX Ventures-backed Armory, which builds anti-drone jamming systems, has seen a lot of interest from investors. Earlier this year, the company secured a slew of government contracts amounting to ₹100 crore to manufacture and deploy its technology. The startup raised a bridge round of ₹20 crore in March to be able to meet the requirements for the government contracts.

The contracts have resulted in venture investors, even those that don't invest in deeptech, reaching out to company founder Amardeep Singh. These include investors who have traditionally backed B2B or B2C ventures, and who don't always necessarily understand the metrics of evaluating deeptech startups.

“For a lot of them, it's a learning process, because especially in a sector like defence, growth isn't consistent, it's spiky. Investors are coming to terms with the fact that these are slightly different businesses, take time to build and won't return on their usual 5–7-year timeline,” Singh said.