New $1B VC alliance to fund India's deep-tech start-ups
What's the story
A coalition of eight US and Indian venture capital (VC) and private equity firms has formed to invest in India's deep-tech start-ups. The group, called the 'India Deep Tech Investment Alliance,' has pledged more than $1 billion over the next decade. Members include Accel, Blume Ventures, Celesta Capital, Gaja Capital, Ideaspring Capital, Premji Invest, Tenacity Ventures, and Venture Catalysts. Each firm has committed to deploying private capital over a 5-10 year period into Indian-domiciled deep-tech start-ups.
Funding focus
Addressing India's deep-tech funding gap
The formation of this alliance comes as a response to long-standing funding challenges in India. In April, Commerce Minister Piyush Goyal had criticized domestic start-ups for their lack of innovation. This new coalition seeks to channel long-term private capital into deep-tech ventures that have struggled with funding in India. The members also plan to provide mentorship and network access through this alliance.
Strategic move
Aligning with government initiatives
The alliance plans to leverage the Indian government's ₹1 trillion Research, Development and Innovation (RDI) scheme. This was announced in the national budget earlier this year to boost deep-tech R&D. The members also hope to use this coalition as a platform for their portfolio companies looking to enter the Indian market.
Investment strategy
Focus on early-stage start-ups
The alliance will focus on early-stage start-ups, from seed to Series B rounds, and avoid late-stage investments. "You could expect more firms to join this alliance, both financial VC firms and private equity firms," Sriram Vishwanathan of Celesta Capital said. He also said that while the coalition doesn't have its own criteria for new members, they must meet the Indian government's conditions under the RDI scheme.
Government engagement
Engaging with the government
The investors in the alliance intend to engage with the Indian government on policies and incentives that promote private industry interests. They also plan to act as a unified voice. An advisory committee comprising representatives from Accel, Premji Invest, and Venture Catalysts will help establish shared objectives while ensuring each fund's independence is maintained.