The Indian venture capital landscape is undergoing a significant shift, with investors increasingly favoring technologists over traditional "hustlers" in the burgeoning AI and deep-tech sectors. This change reflects a maturing ecosystem that values technical depth, research credentials, and intellectual property over pure execution capabilities.
A Preference for Technical Expertise
Venture capital firms are now more inclined to back founders with deep domain expertise, often those with PhDs, backgrounds in research labs, and a track record of building patent-heavy technologies. Anirudh Damani, Managing Partner at Artha Venture Fund, noted that when his firm first encountered space-tech startup Agnikul, it was the founders' profound understanding of propulsion, gained through hands-on experience in labs, that immediately stood out. This emphasis on technical prowess has become a key factor in attracting investment.
Evidence of the Shift
Artha Venture Fund's investment decisions exemplify this trend. Besides Agnikul, the firm has also backed semiconductor startup Calligo Technologies and AI-driven Low Earth Orbit (LEO) satellite infrastructure company TakeMe2Space, both of which are led by engineering-focused teams. Similarly, Avaana Capital has invested in research-led companies like Greengrahi, Dreamfly, and others. Fundamentum demonstrated its commitment to IP-led ventures with a $50 million funding round for Geniemode in February.
The Rise of Deep-Tech Funding
This preference for technically grounded founders coincides with a broader surge in deep-tech investment in India. Deep-tech investments reached $324 million across 35 deals in the first four months of 2025, doubling from $156 million in the same period in 2024. In 2024, key areas such as artificial intelligence attracted 87% of all deep-tech funding, alongside space tech, quantum computing, robotics, and semiconductors. These sectors are not only commercially promising but also strategically important for India's technological advancement and global competitiveness.
Government and VC Initiatives
The Indian government is actively promoting AI and deep-tech through initiatives like the India AI mission, which aims to establish the country as a leading global hub for AI innovation. This includes the "IndiaAI Startup Financing" program, designed to provide risk capital and support to AI startups across various stages of development. Furthermore, collaborations with international organizations like Station F in Paris offer Indian AI startups opportunities to scale globally.
Venture capital firms are also partnering with tech giants to boost the AI ecosystem. Google and Accel, for instance, have joined forces to fund at least 10 early-stage Indian AI startups, co-investing up to $2 million in each. This partnership provides not only capital but also access to Google's AI resources, infrastructure, and mentorship.
India's Maturing Ecosystem
India's venture capital ecosystem has matured significantly, with a growing diversity of capital sources that allow a broader range of startups to thrive. Romit Mehta, Vice President at Lightspeed India Partners, notes that the capital pool has deepened, offering better capital-business fit and guidance for startups. This maturity is reflected in the increasing number of Indian startups going public in deep-tech sectors like AI, electric vehicles, and energy.
Challenges and Opportunities
Despite the positive trends, challenges remain, including a shortage of deep-tech talent, long development cycles, and regulatory complexities. Overcoming these hurdles will be crucial for sustaining the growth of India's deep-tech ecosystem.
Overall, the shift towards funding technologists over "hustlers" signals a new phase in India's AI and deep-tech landscape. With increasing investments, government support, and a maturing VC ecosystem, India is poised to become a global leader in these transformative technologies.
