Why specialist deep-tech funds are now spawning in India
What's the story
India's push for self-reliance in semiconductors, defense, space, and artificial intelligence (AI) is giving rise to a new breed of specialized deep-tech funds. These funds are being set up by investors looking to support start-ups that stand to gain from policy incentives and increased strategic spending. The shift is reshaping venture capital allocations in the country.
Policy impact
Strategic technologies less risky for private capital
Initiatives like Semicon 2.0, the India AI Mission, and defense indigenization programs have made strategic technologies less risky for private capital.
They have also created domestic demand, making sectors such as semiconductors, AI, aerospace, and cybersecurity attractive investment opportunities.
Raj Sethia, founder and managing partner of MountTech Growth Fund, said they entered this space because they saw a change in policy direction three to four years ago.
Global influence
Geopolitical factors driving shift in investor mindset
The Ukraine war, supply-chain disruptions, China-plus-one strategies and rising geopolitical tensions have underscored the need for countries to be technologically self-reliant.
This has led investors to look beyond financial returns and consider backing businesses that align with long-term strategic interests of the country.
Ajay Modi, Director at Piper Serica said government policy, institutional support, and India's engineering talent are now creating a compelling opportunity in strategic technologies.
Fund emergence
New funds reflect deep-tech shift
The shift toward deep-tech investing is reflected in new fund launches.
Mumbai-based Piper Serica recently launched the Bharat Tech Fund, a Category II Alternative Investment Fund (AIF) with a target of ₹600 crore and a greenshoe option of ₹200 crore.
New Delhi-based MountTech Growth Fund (MGF Kavachh), also launched in 2024, expects to close its maiden fund at around ₹500 crore, double its target, reflecting growing investor appetite for sovereign technologies.
Ecosystem shift
Semiconductor opportunities attracting deep-tech investors
Modi said India's manufacturing ecosystem is moving from assembly-led production to IP-led innovation.
He drew parallels with the automobile industry, saying electronics and semiconductors are entering a similar phase.
This includes opportunities in chip design, packaging, fabrication, sensors, AI compute, photonics, and neuromorphic computing.
The Bharat Tech Fund will support Series A start-ups that have commercialized their technologies and are ready to scale up operations.