Why India’s global startup playbook is ill-suited for deeptech

The backlash against Goyal’s remarks was swift and predictable. Startup founders, enablers and watchers joined camps either defending or criticising the progress of India’s entrepreneurial ambition and effort.

But beyond the discourse on the internet, Goyal’s remarks pointed to an uncomfortable truth: builders in India have long struggled to turn foundational science into scalable and commercialized innovation. Some have literally aimed for the moon and folded under the weight of capital constraints.

India’s global startup playbook, built for SaaS and scale, is ill-suited for deeptech, defined by startups working at the frontier of science and engineering.

Foundational innovation takes longer, costs more and requires an entirely different kind of ecosystem.

Unlike consumer internet startups that scale quickly with venture capital funding, deeptech ventures face long gestation cycles, intensive and expensive research and development (R&D) and often also a scarcity of patient capital.

Their milestones and breakthroughs rarely make headlines, even though they represent some of the country’s most sophisticated tech efforts. Many founders navigate various bottlenecks, from limited access to testing labs to a fragmented pool of scientific talent all while balancing global competition and uncertain revenue models. Funding is a challenge, as is their ability to build cross-disciplinary teams and navigate regulatory hurdles.

Globally, the race to dominate deeptech is accelerating, with countries like the US and China heavily investing in frontier technologies from quantum computing and semiconductors to artificial intelligence (AI) and biotech.

In these countries, state-backed funding and university spinouts have created robust ecosystems where deeptech startups can thrive despite long time horizons. In comparison, India’s deeptech pipeline remains relatively nascent, in terms of scale and institutional depth.

Abusing a buzzword

“In India, the word ‘innovation’ has been stretched so thin, it has lost all meaning,” says Santanu Datta, a veteran scientist and cofounder of Bugworks Research, a biotech startup, which is developing first-in-class antibiotics. “From making a new kind of fusion food to designing an electric car, everything gets branded as innovation,” he adds.

But the kind of innovation Datta is interested in is slow, expensive and often invisible, where success comes sometimes years after persistent scientific work across disciplines. This form of innovation, he explains, is “a team sport, not a tennis match”.

Datta draws a sharp distinction between what he calls a single-parameter versus multi-parameter innovation. India has succeeded in the former—fintech, for example, thrives because it demands agility in just a few domains and delivers returns quickly.

“But deep science innovation, like drug discovery or medical imaging, is about orthogonal disciplines coming together. You need a mathematician, an engineer, a cell biologist as well as people with business and marketing skill sets, all under one roof. That’s rare in India, because we haven’t built institutions or cultures that encourage such collaboration,” he says.

Bugworks’ own journey straddles two worlds. While the innovation is driven from India, its collaborations and funding networks extend to the US, Japan, Australia and Europe. Traditional venture capitalists (VCs), as Datta notes, want fast exits, which is a poor fit for drug discovery, where development can take 10 to 15 years. Instead, Bugworks leans on a mix of philanthropic capital, global health grants and specialized VCs with patience capital and long-term vision. Bugworks is currently doing global clinical trials for its new antibiotic drug.

“There is no short path,” Datta says. “This is deep science. You fail for years before you succeed.”

Building for the long haul

Deeptech startups remain on the periphery of India’s venture capital landscape, attracting significantly smaller cheques than their SaaS and consumer-facing counterparts year after year. 

Even at its peak in 2022, deeptech funding in India was just around $2.6 billion, a sliver compared to the $10 billion-plus that flowed into consumer tech the same year, as per data shared by Tracxn.

In the absence of traditional venture capital, long-term deeptech builders have stitched together funding models that align with their timelines.

For Ather Energy, the electric two-wheeler manufacturer born on the IIT Madras campus, a strategic investment from Hero MotoCorp and support from entrepreneur-turned-investor Sachin Bansal provided early momentum. Planys Technologies, building underwater robotics, scaled with help from iDEX grants, family offices like Ashish Kacholi’s and industry players such as BPCL and Shell.

Bugworks blended philanthropic capital, global health grants and niche international VCs to fund its antibiotic research, while Tonbo Imaging, developing advanced surveillance and defence systems, attracted deeptech-aligned investors like Artiman Ventures, Qualcomm and Celesta Capital.

These startups, each with at least a decade-long journey, are examples of how deeptech founders have navigated India’s complex landscape of multidisciplinary innovation.

Manish Singhal, founder of pi Ventures, an early stage fund backing deeptech startups, notes that while a decade ago capital structures to support such ventures were limited, the market has now evolved. He says that today there is hybrid capital—venture money mixed with government grants, corporate partnerships and philanthropic capital—available to fund the long gestation journeys of deeptech startups.

While government policies have recently indicated a push towards enabling deeptech innovation through startups, including the National Deep Tech Startup Policy of 2023, and outlining support through grants and better access to research infrastructure and Sidbi’s Fund of Funds for Startups, industry folks say much more needs to be done.

Today, there is hybrid capital—venture money mixed with government grants, corporate partnerships and philanthropic capital—available to fund the long gestation journeys of deeptech startups.

Singhal argues that a government Fund of Funds isn’t the most optimal way of helping deeptech startups. Instead, he believes, that kind of capital could be invested in setting up labs, testing facilities and prototyping spaces for deeptech companies that lack the environment to test or incubate their innovations.

Arvind Lakshmikumar, founder of Tonbo Imaging, argues that deeptech innovation requires the ability to withstand long cycles of uncertainty. “Developing hardware technology is inherently capital-intensive. The government must be willing to co-invest, alongside venture capitalists,” he says.

Infrastructural vacuum

Initial and patient capital is just one part of the puzzle. Infrastructure and lack of testing spaces for deeptech innovation continues to remain a major challenge for many startups. A critical gap is the absence of real-world validation environments. Indian startups often lack access to field testing or early domestic customers.

“By being a first customer, the government can help companies move from prototype to deployment, offering critical field feedback and validation,” Lakshmikumar says.

He argues for a mission-driven approach in order for India to realise its deeptech potential. This includes setting national priorities, funding high-risk R&D institutions and enabling academic spin-offs.

The infrastructure gap is more evident among those innovating in the hardware space. For Tanuj Jhunjhunwala, co-founder of Planys Technologies, finding testing environments remained a major challenge in the initial years. “You can’t test underwater robotic platforms in an office,” he says. “We needed deeper waters or near-site environments for testing and improving our technology.”

But in India, getting those is a bureaucratic maze. Government clients and large private players are often hesitant to allow on-site testing to avoid disruptions to their operations or potential failures. Jhunjhunwala, who graduated from IIT-Madras in 2014, says he was fortunate to study at an institute that provided the initial support in terms of labs and an incubation centre to test the initial version of the underwater robot.

Recognizing this gap, some ecosystem enablers have begun to step in. Hyderabad’s T-Hub, one of the country’s largest innovation hubs, currently offers startup support across sectors and stages, while T-Works, also based in Hyderabad, offers a prototyping centre with access to advanced equipment such as 3D printers and CNC machines, which help hardware startups test and build faster without upfront capital expenses.

Bengaluru’s IKP Eden and Pune’s Venture Center also offer shared R&D infrastructure, including testing setups and regulatory support for biotech and medtech ventures. Platforms like these aim to lower entry barriers and enable collaboration between academia, industry and early-stage startups.

But considering the size and market ambition of deeptech innovation in India, a handful of such initiatives is unlikely to support the scale and risk appetite needed for India’s deeptech ambitions to truly thrive.

Jitendra Kumar, managing director of BIRAC (Biotechnology Industry Research Assistance Council), emphasizes that the council has significantly evolved from a funding agency to building a robust ecosystem, which includes providing incubation support, mentorship networks and policy advocacy to better support deeptech and biotech startups, particularly those with long gestation periods, over the past decade.

Kumar points out that the journeys of BIRAC-supported startups like Bugworks, Fibroheal (a biotech startup working on silk proteins), Nayam Innovations (a medical device startup) and Planys offer insights into what works and what doesn’t in India’s deeptech innovation landscape.

Their stories, he says, hold valuable lessons for shaping India’s next-gen innovation policy. The key takeaways from their journeys include the need for high-end infrastructure to accelerate development, early access to global markets, deeptech-specific mentorship and founder support, structured collaboration between academia, startups and industry, and the critical importance of long-term and patient capital.

These examples, according to Kumar, show that deeptech success depends not just on breakthrough ideas, but on the systems that support and sustain them.

How Tonbo did it

Tonbo Imaging’s products, which include thermal cameras, night-vision systems and battlefield imaging platforms are currently used by defence forces across more than 25 countries, including NATO members.

Lakshmikumar explains that from the outset, the company aimed to be a full-stack original equipment manufacturer (OEM) by owning the intellectual property behind its optics, sensors and embedded AI.

That meant Tonbo had to go through years of upfront R&D before a product could even be field-tested. Its investors, Lakshmikumar says, were aligned with the need to prioritize R&D over short-term revenue.

“There’s no shortcut when it comes to deeptech innovation,” he says. “It demands significant upfront investment, flexibility in how that capital is deployed and a tolerance for delays in commercial returns.”

What’s helped Tonbo thrive, despite these gaps, is a global-first mindset. The company recruited PhDs and engineering talent from around the world and collaborated with international academic labs and research consortia. This early investment in human capital, says Lakshmikumar, “played a crucial role in shaping our technical capabilities and accelerating product development”.

Getting there slowly

Some venture capitalists believe that deeptech in India is no longer an emerging story but a quietly evolving one.

“Eight years ago, there were barely any investors willing to take an early bet on deep science startups. Today, that’s changed,” Vishesh Rajaram, managing partner at Speciale Invest, an early stage fund focused on deeptech startups, says.

There’s a growing recognition that these companies are building defensible, interdisciplinary technologies rooted in scientific breakthroughs. But evaluating them with traditional startup metrics like fast revenue growth or five-year exits doesn’t work, adds Rajaram. While challenges in testing infrastructure and peer ecosystems remain, he believes India has a unique advantage in its ability to iterate at lower costs.

“You won’t find ready-made labs if you’re building something that’s never existed before,” he says. “But the cost of experimentation here is still dramatically lower than in most parts of the world.”

The success of one rocket company or one biotech startup that licenses a new drug can shift the entire narrative, he believes. But until then, Indian deeptech founders will continue doing what they’ve quietly done for years: build from scratch, figure it out, and try not to run out of time before the science catches up.