Deeptech funding to gather momentum in 2026 as VC firms dig deep with cautious optimism
Venture capital firms delivered on their promise to step up deeptech investments in 2025. The coming year could see VCs writing larger cheques to companies that have a proven product-market fit, lower technical risks, and strong fundamentals.
The common refrain by venture capital firms this year was that they would step up investments in the deeptech sector. Data from market intelligence platform Tracxn indicates that VCs have delivered on this promise. And the momentum is expected to pick up in the coming year.
As of December 2025, bets in the deeptech sector have seen a marginal increase in funding compared to 2024, with capital flowing into early-stage startups in the segment. According to data from Tracxn, deeptech companies raised $1.57 billion across 265 deals year-to-date, compared to $1.24 billion raised in 2024 across 388 rounds—indicating that, while investors were more cautious this year, they wrote bigger cheques to deeptech startups.
A slew of Indian venture capital firms raised new funds in 2025—Accel closed a fund at $650 million, while Nexus Venture Partners closed a fund at $700 million, proving that India’s VC ecosystem is flush with cash.
In September, eight venture capital and private equity firms from India and the United States teamed up to launch the India Deep Tech Investment Alliance, which Accel is a part of.
A string of deeptech focused funds also raised new capital stockpiles this year. In July, Yali Capital, which counts Intel CEO and veteran investor Lip-Bu Tan as among its advisors, raised Rs 893 crore to fund deeptech startups.
Many deeptech focused funds also raised maiden funds in 2025, demonstrating that capital flow into IP-driven companies is expected to take off next year.
Speciale Invest, which specialises in deeptech, SaaS, and AI/ML startups, doubled down on the sector. In December, Speciale Invest said it is looking to raise a Rs 1,400 crore fund to help early-stage startups raise follow-on capital, a persistent struggle among these companies which have a comparatively longer gestation period.
The reasons for heightened focus in the deeptech ecosystem are aplenty. Regulatory tailwinds is one of them.
The Department of Science and Technology has launched the Research, Development, and Innovation Scheme, under which the government has set aside a Rs 1 lakh crore fund to back R&D in an attempt to foster a private sector-driven innovation ecosystem through long-term, low-interest loans for deeptech ventures.
In April, Union Commerce Minister Piyush Goyal criticised the Indian startup ecosystem, noting that while many startups were focusing on food delivery and fantasy sports apps, companies in other countries were working on EV, battery-tech, semi-conductors, and AI.
This sparked a massive debate on social media with investors, startup founders, and experts weighing in on the matter. In the following months, ‘deeptech’ became the subject of several roundtables and panel discussions. The momentum is expected to gather steam in 2026, moving beyond discussions.
Deeptech investments are expected to gradually rise in the coming years as more companies mature and raise larger rounds of funding. Based on this year’s trends, semiconductors, artificial intelligence, and space-tech are expected to see rising investor interest.
However, investors will continue to adopt a cautious and selective stance.
Deeptech startups are a tough sell to investors due to the long gestation periods and the steep trajectory to revenue generation, among other challenges. To add to this, the technology being developed by these firms is complex and requires a deep understanding of the sector, making it a difficult pitch to investors.
As a result, there may not be a huge number of deals in the sector but VC firms are likely to write larger cheques to companies that have a proven product-market fit, lower technical risks, and strong fundamentals.
Edited by Swetha Kannan