Deep-tech growth in India needs a mindset change at the ecosystem level, say experts
Deep-tech startups are a critical component in the digital transformation journey. According to a 2019 NASSCOM report, 18 percent of all startups in India can be classified as deep-tech, with a focus on technologies like AI, ML, AR/VR, Blockchain, and IoT across industries such as fintech, healthtech, consumer wearables, agritech, and more.
At a recent panel discussion as part of the Bengaluru Tech Summit 2020, Jitendra Chaddah, Country Manager, Global Supply Chain, Intel India; Manish Singhal, Founding Partner, pi Ventures; Anoop N Menon, Principal Director, Accenture Ventures and Open Innovation; and Abhay Tandon, Director and Head, Lowe's Innovation Labs India shared their insights on Creating a deep-tech mindset - Why Bengaluru is poised to carve out a global niche with its ecosystem.
The pandemic has accelerated growth in deep tech adoption
Kicking off the discussion on how COVID-19 has changed India’s stance on technological adoption, Manish said that the pandemic has accelerated the adoption of artificial intelligence (AI) across some industries by two years. He added,
“People are spending more time online and producing more data. Automation is picking up. AI has to play a key role at the core of all this to make it work seamlessly. I believe that adoption of deep tech and AI have been massively accelerated especially in most sectors where tech automation can play a role.”
Adding to this, Jitendra said that in the last eight months, technology has played the role of a catalyst in the well-being of society and enabled productivity and business improvement, and that this trend would continue. He added that going forward, there would be propagation of niche, geography-specific tech based on specific requirements such as neuro-linguistic programming (NLP) for India.
Anoop spoke about how the pandemic has highlighted the inherent need to collaborate within an ecosystem. “Deep-tech startups used to work in silos, while corporates with legacy systems were trying to move to digital transformation. The pandemic has accelerated the convergence of these two parallel worlds. While tech was being built, business adoption was slow. Both are coming together faster now. We will see great products that will be far more sustainable and permanent in adoption in a year’s time.”
“Deep-tech adoption has moved from a good-to-have to a must-have bucket. Deep-tech initiatives are moving from proof-of concepts (PoCs) to production very rapidly,” added Abhay.
Why India needs to bring up the threshold for deep-tech startups
Commenting on key areas where deep-tech could have a potential impact, Manish said that sectors such as healthcare would remain evergreen. New areas where deep-tech could make a difference were remote work collaboration and introducing a human touch into digital interaction.
He added, “Though not related to the pandemic, a deep-tech area where India is making a difference is space tech. ISRO is a premier global space organisation. We have a strong infrastructure and knowledge base in India, and spacetech is a dark horse for the country.”
Talking about the importance of realigning the definition of deep-tech in India to global standards, Jitendra said, “The very definition of deep-tech is that the business model is based on very high tech innovation and scientific discovery. Our definition of deep-tech may be at a lower level than the global one and we need to correct that. Deep-tech startups would be solving big problems not aligned to just one vertical, and require longer gestation periods, a lot of research, capital investment, and R&D investment.”
He also added that people hesitate to invest in this space due to relatively fewer unicorns. “We need a change in the mindset at the ecosystem level for our deep-tech startups to get the right support to enable them to succeed at a global level,” he elaborated.
Anoop agreed that the benchmark to define deep-tech in India is hazy, and that it was critical to bring up talent in this space. In the same vein, he said that there was a need for corporates and investors to have a mindset change. “It’s critical that as ecosystem enablers we understand the challenges that deep tech startups go through, and modify our expectations,” he added.
He also said that when it came to the adoption of deep-tech, India lagged behind the world in terms of infrastructure or enablers and that needed to change.
On the startup front, he said that while startups had a strong focus on building a product, they lacked in articulating its business value. “What good is automation when you can’t actually tell a client what will be the productivity benefits from the deployment of certain tools? They need to articulate benefits in business terms rather than technology terms. The articulation of ROI and ability to work in ambiguous systems is critical. Startups need to be patient and persistent when working with large corporates to realise the value.”
Like his fellow panelists, Manish also concurred that in India, ‘deep-tech’ as a definition is used in a very casual manner. “Deep-tech has to have a threshold. Startups need to figure out whether they are really making a 10x difference to a problem statement they have been handed, or only an incremental difference, which makes adoption more difficult. They need to aim higher. Things start to fall in place with 10x thinking, rather than incremental innovation thinking.”
An enabling ecosystem, revised expectations and funding can make a difference
Manish also spoke about the need for a change in the ecosystem mindset and the importance of enabling alternate forms of funding for true deep-tech startups — either in the form of grants, or more pockets of experimental money that is non-dilutable.
When discussing the technology that they believed would have the most impact in the near future, quantum-tech figured prominently on the list. Jitendra said that the convergence of AI, quantum, 5G and Blockchain would be promising in the next few years. He added that there would also be a lot of innovation in the materials space for electronics and the semiconductor industry where growth will take place. Anoop saw scope for growth in the concept of immersive experiences, as well as in the cybersecurity space. Manish also picked quantum-tech and material innovation, which he described as the key fabric of any deep-tech ecosystem. He also mentioned that within AI, there was scope to see how AI models could start interpreting human behaviour in a constructive way. Abhay spoke about a hyper-personalised experience for consumers as how they envisaged the future.
When asked about why they believed Bengaluru had an edge for deep-tech, almost all panelists mentioned the conducive ecosystem as a key determinant. Jitendra added that Bengaluru was a research and educational hub, and that deep-tech could benefit from these. He mentioned that the only thing lacking was a deep-tech council in the country. Anoop said that Bengaluru’s industrial presence meant that it was the first port of call for startups when it came to doing business. With a vibrant and supportive ecosystem which fuels and funnels innovations, he said that Bengaluru offered greater acceptability. Abhay said that the exposure of the last few decades had brought in a maturity in the ecosystem where innovation could thrive. Manish mentioned the availability of talent and infrastructure as key reasons for Bengaluru being a deep-tech hub.