India’s deep-tech startups have secured $574 million across 61 deals so far this year. This surge is challenging traditional venture capital firms that are used to software-based business models. To mitigate risks in sectors like space and biotech, investors are moving away from standard financial metrics to implement rigorous technical due diligence, prioritizing domain expertise over traditional valuation methods.
The Indian deep-tech startup sector has reached a new milestone in 2026, with startups raising approximately $574 million across 61 deals so far this year. This activity brings the total investment in the sector to roughly $11.4 billion since 2015. However, this rapid inflow of capital is highlighting a significant mismatch between the nature of these companies and the evaluation methods used by traditional venture capital firms.
Investors who previously focused on software-as-a-service or e-commerce models—where revenue growth and customer metrics were the primary signs of success—are finding these tools ineffective for deep-tech. Industries like space, quantum computing, and biotechnology require long periods of research and testing before any commercial revenue is generated. This creates a risk for investors who are accustomed to the faster business cycles of the consumer-internet economy.
To bridge this gap, venture capital firms are changing how they vet potential investments. Instead of relying solely on financial analysts who look at spreadsheets, many funds are now hiring scientists, engineers, and industry experts to evaluate the actual technology. This technical due diligence is becoming the new standard to determine if a company’s intellectual property can actually be converted into a profitable business. Firms such as Antler, Bertelsmann India Investments, and Jungle Ventures are among those adapting their internal teams to handle these complex requirements.
Government support, particularly through the ₹1 lakh crore Research, Development and Innovation scheme, has provided a safety net for early-stage research. This state funding helps reduce the initial risk for private investors. Even with this support, the sector faces a structural challenge known as the funding gap at the Series B and C stages. This is often called the valley of death, where startups have proven their technology in a lab but struggle to find the large amounts of capital needed to scale up to commercial production.
Notable success stories like Pixxel, which recently secured $100 million for its satellite imaging technology, and the spacetech company Skyroot, which raised $60 million, show the potential of the sector. However, the future health of the Indian deep-tech ecosystem will depend on whether investors can provide the long-term, patient capital required to help these companies survive the transition from scientific proof to mass-market reality. Investors will likely monitor how effectively firms manage these technical risks and whether they can successfully navigate the funding gap that often hits companies at later stages of development.