VCs to Bet on Deep Innovation and Real World Impact With Maturing Investment Climate Investors now are becoming more discerning, not about backing fewer companies but about backing smarter, deeper, and more mission-critical ventures.
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The funding ecosystem in India is undergoing a strategic reset, leading venture capitalists to move away from hype-driven plays and aligning capital with ideas focused on infrastructure, sustainability, and global competitiveness.
Investors now are becoming more discerning, not about backing fewer companies but about backing smarter, deeper, and more mission-critical ventures.
"The investment landscape today is more disciplined and thoughtful. While capital continues to flow, especially at the early stages, there's far greater emphasis on quality, sound business models, operational discipline, and domain expertise," says Kedia. "Investors are leaning into founders who have a deep understanding of the problem space and can navigate the messy middle, not just the fundraising narrative."
Capital A recently announced the launch of its Fund II with a corpus of INR 400 crore and plans to invest in close to 20 companies, which are poised to receive initial cheques between USD 750,000 to USD 1.5 million. The startups will also receive a lifecycle commitment of USD 2-3 million per startup.
The firm's MaXcel accelerator program is surfacing promising founders from lesser-known places.
"We are seeing strong ideas coming from Tier 2 cities… from places like Tripura, Coimbatore, and Jammu & Kashmir, who are working on industrial automation, smart sensors, and robotics. These are grounded, real-world solutions," said Kedia.
According to Kedia, India is transforming from an assembly hub to an innovation powerhouse. "Deeptech will be key to import substitution and global competitiveness," Kedia said.
VC firms across the globe are now adapting to a tighter, more value-driven market. Expert DOJO, a California-based fund, recently announced its early-stage India focus with a USD 15 million allocation from its global USD 100 million pool. Each startup is set to receive USD 100,000 and mentorship on international growth.
"Even though some funds are narrowing their focus, we continue to support early-stage companies with substantial global potential across various industries," says Ashutosh Kumar Jha, General Partner at Expert DOJO.
According to Jha, while the firm doesn't box itself into specific sectors, it sees resilience and growth in EVs, B2B SaaS, fintech, healthtech, and AI. The key differentiator, however, is no longer sector, but execution.
"The founder's knowledge of business principles, product-market fit, revenue trajectory, and international expansion strategy is more important to us than the industry. Instead of looking for short-term hype, we are looking for Indian startups that can create globally significant solutions," said Jha.
While funds are doubling down on scale and inclusion, Bluehill VC is betting on India's semiconductor awakening. "The next big area of interest for us is in the semiconductor space," says Manu Iyer, General Partner and Co-founder at Bluehill VC.
"We are excited about the opportunities that are being opened up here in spaces like chip design, material science, metrology, IP development, EDA tools, foundry, and fabless."
According to Iyer, the firm is exploring opportunities across the chipmaking value chain, including chip design, metrology, and EDA tools for fabless startups and IP development. Strong developments in policymaking, like the India Semiconductor Mission and PLI/DLI programs, are giving investors and startups the momentum they need.
"The support for the ecosystem… will go a long way in helping startups build in this space," Iyer said.
