India's deep-tech ecosystem has experienced significant growth over the past decade, transitioning from a nascent stage in 2015-16 to a burgeoning sector today. Despite this progress, Pranav Pai, Founding Partner and Chief Investment Officer at 3one4 Capital, emphasizes the pressing need for patient, risk-tolerant capital to sustain and accelerate this momentum.

Evolution of the Deep-Tech Ecosystem

In 2015-16, India's deep-tech landscape was virtually non-existent. However, recent years have seen a marked transformation, with the government identifying deep tech as a national priority. Initiatives such as the ₹10,000 crore 'Fund of Funds', the India Semiconductor Mission (ISM), and the National Deep Tech Startup Policy (NDTSP) underscore this commitment. These programs aim to foster innovation and commercialization in frontier technologies, including artificial intelligence, semiconductors, and clean mobility.

Challenges in Funding

Despite governmental support, deep-tech startups face a capital crunch. Funding remains predominantly directed towards consumer internet ventures, leaving sectors like AI, semiconductors, and clean mobility underfunded. The inherent characteristics of deep-tech ventures—long development cycles, substantial R&D expenses, and regulatory complexities—necessitate patient capital. However, such funding is still scarce in India.

The Imperative for Patient Capital

Pranav Pai highlights that the past five years, especially during the COVID-19 pandemic, have reinforced the necessity for indigenous intellectual property creation, manufacturing, and drug discovery. He asserts that areas ranging from biotechnology to AI and quantum mechanics require increased domestic investment. While optimistic about new policy prioritizations, Pai stresses that scaling deep-tech innovations into commercially successful, globally competitive businesses demands sustained capital, ecosystem collaboration, and patient execution.

Conclusion

To fully realize its potential in the deep-tech sector, India must address the funding challenges hindering early-stage startups. Aligning investment strategies with the unique needs of deep-tech ventures is crucial for the nation's advancement in this domain.