U.S. and Indian VCs just formed a $1B+ alliance to fund India’s deep tech startups

Eight U.S. and Indian enterprise capital and personal fairness corporations — together with storied traders Accel, Blume Ventures, Celesta Capital, and Premji Make investments — have fashioned an uncommon coalition to again India’s deep tech startups, pledging greater than $1 billion over the subsequent decade to strengthen U.S.-India tech ties.

The alliance addresses longstanding funding issues. In April, Indian Commerce Minister Piyush Goyal drew criticism after slamming home startups for specializing in meals supply as an alternative of innovation, contrasting them with Chinese language corporations in a presentation titled “India vs. China: The Startup Actuality Verify.” A number of traders and founders countered that India lacks capital for deep tech ventures and stated Goyal’s feedback ignored the willpower of founders constructing for the native market. The brand new alliance seems to handle these issues, aiming to channel long-term personal capital into deep tech ventures that many founders say have struggled to safe funding in India.

The transfer stands out as a result of traders usually compete for offers fairly than formally band collectively below a named alliance with binding pledges. Whereas VCs usually co-invest on a deal-by-deal foundation, most cross-border collaboration happens informally via particular person fund methods, fairly than via coordinated capital blocs.

Referred to as the India Deep Tech Funding Alliance, the group brings collectively Celesta Capital, Accel, Blume Ventures, Gaja Capital, Ideaspring Capital, Premji Make investments, Tenacity Ventures, and Enterprise Catalysts, the corporations stated in a joint assertion on Tuesday. The launch follows the Indian authorities’s approval of a ₹1 trillion (roughly $11 billion) Analysis, Improvement, and Innovation (RDI) scheme, introduced within the nationwide price range earlier this yr to spice up deep tech R&D.

Beneath the alliance, every member will commit personal capital over a 5- to 10-year interval to Indian-domiciled deep tech startups, the corporations stated. For now, there are comparatively few such firms, as lots of India’s best-known deep tech ventures with Indian founders are included within the U.S. However New Delhi has made native incorporation a requirement for incentives below its new RDI scheme, which the alliance members intention to leverage.

Along with funding, the members will provide mentorship and community entry. The corporations additionally plan to make the most of the alliance to assist their portfolio firms increase into the Indian market.

“That is consistent with the strategic pursuits of each India and the U.S. on the governmental degree, specializing in essential and rising applied sciences,” stated Celesta Capital managing accomplice Arun Kumar, who would be the inaugural chair of the alliance, in an interview.

Nonetheless, the geopolitical backdrop is sophisticated. In February, President Donald Trump and Prime Minister Narendra Modi launched the TRUST (Reworking the Relationship Using Strategic Expertise) initiative to deepen U.S.–India tech ties. However relations quickly confirmed pressure, as Trump imposed a 50% tariff on Indian items final month over New Delhi’s continued purchases of Russian oil, a transfer analysts say has put the 2 leaders on reverse sides of a widening commerce and geopolitical rift.

Regardless of these tensions, the alliance — however the geopolitical rift between the 2 leaders — is betting on India as a hub for startups growing foundational applied sciences resembling AI, semiconductors, area, quantum, robotics, biotech, vitality, and local weather tech.

“We discover India as a very attention-grabbing market, not only for the alternatives that exist for brand new firms that get began in India, but additionally for firms within the U.S. which can be looking for to increase into the Indian market,” Sriram Vishwanathan, founding managing accomplice at Celesta Capital, informed Trendster.

Celesta Capital — an early backer of Indian startups resembling space-tech enterprise Agnikul, drone maker IdeaForge, and AI-driven most cancers diagnostics agency OneCell Diagnostics — spearheaded the hassle after discussions with trade stakeholders and the Indian authorities.

“We’ve put this factor collectively to really energize the ecosystem and produce like-minded traders collectively,” Vishwanathan stated.

The alliance will give attention to early-stage startups — from seed to Collection B — whereas steering away from late-stage investments, Vishwanathan famous. He additionally acknowledged that the billion-dollar-plus dedication is just the start, as “any lengthy journey begins with step one.”

“You would anticipate extra corporations to affix this alliance, each monetary VC corporations and personal fairness corporations,” he stated. “You also needs to anticipate corporates to affix who’ve fairly important funding applications.”

Whereas the alliance doesn’t set its personal eligibility standards for brand new members, Vishwanathan stated individuals should meet the Indian authorities’s circumstances below the RDI scheme — together with investing in “dawn” sectors, backing India-domiciled startups, and securing native regulatory approvals.

“The alliance is only a platform for partaking with the federal government,” he informed Trendster.

As a gaggle, the traders within the alliance plan to interact with the Indian authorities on coverage and incentives to advance personal trade’s pursuits and act as a unified voice, Vishwanathan stated.

Up to now, regulatory adjustments rolled out with out trade enter have led to turmoil in India. Some such strikes have drawn intense criticism from U.S. traders and have been subsequently withdrawn following widespread outrage.

The alliance’s members will share data voluntarily and coordinate on pipeline growth, due diligence and co-investment alternatives, the corporations stated.

An advisory committee, comprising representatives from Accel, Premji Make investments, and Enterprise Catalysts, among the many early individuals, will assist set up shared aims and guarantee coordination whereas preserving the independence of every fund.

Kumar acknowledged that whereas he’s the inaugural chair, the alliance’s management will rotate because it strikes ahead.

The alliance might show a double-edged sword for Indian deep tech startups. Whereas pooling long-term capital and giving a unified voice to the federal government seems to be a boon, there may be danger if coordination falters, leaving promising firms caught within the gaps.

“Over the subsequent decade, startups will construct in India and export breakthrough options to the world. The tailwinds are in place: ambition, expertise, coverage intent, and affected person capital,” stated Accel accomplice Anand Daniel in a ready assertion.