Bharat innovation fund

Capital and scaling up: Two bets for Indian DeepTech in the global race

Indian DeepTech ecosystem needs to address the problem of capital inadequacy and the challenges in scaling up to gain strong foothold in the global race.

DeepTech has seen a steady growth in the last few years. Enthusiastic founders and the supporting ecosystem have come together to form a bank of success stories to rely on. But the competition globally is massive. Indian DeepTech ecosystem needs to scale up and do it now. Courtesy Covid19, several sectors are getting the push they awaited over years.

Bharat Innovation Fund’s Partner Somshubhro Pal Choudhury gives an insight into the sectors invested in, the upcoming trends for DeepTech and how capital inadequacy and the challenge in scaling up has to be addressed to compete with the global DeepTech ecosystem.

 Edited excerpts:

You’ve witnessed the DeepTech startups in the U.S. What lessons can be imbibed by the Indian DeepTech startups?

The biggest difference is the access to capital. Several startups in Europe and US, even if they are at par with the Indian startups, are ahead of the game. Whereas the latter will be scrambling to get to a couple of million dollars funding in India. A similar startup in the U.S would be sitting at a 20-30 million capital.

We were the early ones to dive in this space. Success stories have started to trickle in. As you see more success stories in the DeepTech space investments—which are more focused on e-commerce, marketplace model, consumer centric model etc.—will start moving into DeepTech. Hopefully the next few years can solve the capital inadequacy.

Second, from a business standpoint, proximity to the customers etc. the US startups are way ahead and that’s because of the ready ecosystem they have with early adopters, willingness to try early technologies etc. This ecosystem is still developing in India. Most Indian corporates have started investing arms, incubators etc. Most MNCs with a strong presence in India are also scouting around for startups and good technology companies.

India is an affordable place to do the right product market fit but the struggle is in scaling up. Especially for a DeepTech company you’ve to now see beyond India, quickly ramp up your sales and execution teams in the US. Post product market fit if the companies do not target global customers, it will be an extremely slow growth.

What changes are you expecting in sectors of the DeepTech startups you’ve invested in?

We are sector agnostic but also look at core IP. We have invested in biotech, cybersecurity, IoT, augmented reality.

There would be a couple of deep science startups, which will take years to mature, but once they reach a certain stage it’s a billion plus kind of an outcome. Those are a couple of bets we are taking.

We are investing in a biotech company developing a drug molecule based on an antibody-antigen binding platform. We will be taking a few such bets in deep science space.

The second category is B2B enterprise tech with a focus on defensive technologies and IP. We have invested in a cybersecurity company FireCompass which has filed a bunch of patents and they are looking at completely transforming security testing.

What trends do you see coming up in DeepTech in future?

We see multiple areas in the AI/ML space. We see a lot of activity in applications of AI. Lately I’ve seen a couple of companies even starting to do explainable AI.

With respect to cybersecurity there are multitude of activities happening but a lot of automation and continuous monitoring using AI in the cybersecurity space. We are definitely looking at that space very closely. We have made one investment, and are looking at others as well.

Courtesy Covid19 there is enormous activity in the biotech, healthcare space. There is use of AI to find out the right and new kinds of drug molecule and also with telemedicine kind of opening up enough companies are trying to leverage the new found regulations to provide much more holistic experience to customers. Many of them are using DeepTech elements of IoT and AI.

We’ve looked at AI Chipset companies as well and we are evaluating a couple of them, Quantum computing even though globally we are seeing a lot of activities, we haven’t really seen much of startups in India except for 2-3 of them. We have thesis and insights into each one of these sectors. A few things we’ve touched we understand very well as we have taken a deep dive and developed a thesis. In the blockchain space, we are still learning.

If you look at cybersecurity, AI/ML, augmented reality, Biotech, Health tech—we see a lot of innovation and a good number of deals.


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