India Lags in Building a DeepSeek Rival, but Potential Keeps Investors Excited Emerging technologies such as deeptech, spacetech, and biotech have made significant startups in India but remain behind the US and China in creating companies that have a significant global impact.

Venture capital investment in India has evolved to be a significant catalyst for the startup landscape in India, with investments into the ecosystem accounting for approximately 27 per cent of all alternate capital investments in the past decade, according to the Indian Venture and Alternate Capital Association (IVCA), an apex body promoting the alternate capital industry in India.

According to IVCA, alternate investments over the mentioned period amounted to US $115 billion in 2024, and 81 new funds that emerged worth over USD 8.7 billion were launched, indicating a robust investor inverter interest in the ecosystem.

The emergence of the Chinese-origin DeepSeek and its ascent to competing with the well-established ChatGPT has sparked conversations across the globe as well as its market potential causing several US tech stocks to sink.

The AI company has gained wide popularity after releasing its R1 model, with reactions coming as high up as US President Donald Trump, describing this as a "wake-up call" for US companies.

Emerging technologies such as deeptech, spacetech, and biotech have made significant startups in India but remain behind the US and China in creating companies that have a significant global impact. At the IVCA Conclave 2025 being held in Mumbai, investors from across firms discussed India's challenges in bringing its emerging tech solutions to the world stage.

Ranjith Menon, Managing Director of Chiratae Ventures said that the country faces two major challenges in the area with deeptech gestation periods being longer and while the supply chain for capital at the seed stage exists, is actually limited for later stages.

"There is a need to build a better domestic market for core technologies because currently, startups in this space are having to go to the West or other countries for customers," said Menon.

Deep-tech investments constituted 11 per cent of all deals in India in 2024, up from 7 per cent in 2019. Funding for deep-tech saw 5x growth in the five years between 2020-2024 compared to the previous five-year period, according to data from Speciale Invest.

Rajiv Kalambi, General Partner at Cactus Partners emphasized the need for the three Ms- men, materials, and money.

"We have the talent, education is good but not at the level where it needs to be. The government is doing a lot to help in terms of support but India is still nascent. The country needs more risk capital and R&D budget," said Kalambi.

Shashwat Rai, Partner of Aavishkaar Capita said that despite the setbacks, the entrepreneurial mindset in India is excellent and there will always be an entrepreneur that has an antithesis.

"Indian deeptech companies are not only solving for India but are also solving global challenges," said Rai.

Venture Capital (VC) investments soared in India between January and November 2024, with a total of USD 16.77 billion invested across 888 deals. The deals amounted to a 14.1 per cent increase in value, according to data from Bloomberg.

Additionally, tax benefits and the Indian government abolishing the 'angel tax' last year, was a well-received decision from investors and is expected to further drive funds into the market.

Vikram Gupta, Founder and Managing Partner, of IvyCap Ventures, said that the country is sitting on a pile of capital, waiting to be unlocked into venture capital.

"We have raised a lot of capital that are domestic funds and 70 per cent of the funds are institutional capital. Entrepreneurs are also becoming mature and there are multiple pools of capital being created in India. Successful entrepreneurs are coming to invest with both capital and mentorship," said Gupta.

With the overall IPO market in India reaching USD 35 billion in 2025, startups and corporations look prime to take advantage of public investments in India which has emerged as one of the top destinations for investors to consider.

Menon added that with the exit options presented the IPO market has proven to be significant, especially for early-stage investors.