U.S. and Indian VCs Unite in $1B+ Alliance to Fuel India's Deep Tech Startups

Eight major U.S. and Indian venture capital and private equity firms, including Accel, Blume Ventures, Celesta Capital, and Premji Invest, have launched the India Deep Tech Investment Alliance. This coalition pledges over $1 billion over the next decade to support India's deep tech ecosystem, aiming to strengthen U.S.-India tech ties and address funding gaps.

Addressing Funding Concerns and Government Initiatives

The alliance responds to recent criticisms from Indian Commerce Minister Piyush Goyal, who slammed domestic startups for focusing on food delivery rather than innovation. Investors and founders countered that India lacks capital for deep tech ventures, highlighting the need for long-term private investment. This move aligns with the Indian government's approval of a ₹1 trillion (approximately $11 billion) Research, Development, and Innovation (RDI) scheme, designed to boost deep tech R&D and require local incorporation for incentives.

How the Alliance Works

Members will commit private capital over 5-10 years to Indian-domiciled deep tech startups, focusing on early-stage investments from seed to Series B. In addition to funding, the alliance offers mentorship, network access, and support for portfolio companies expanding into the Indian market. The group includes firms like Gaja Capital, Ideaspring Capital, Tenacity Ventures, and Venture Catalysts, with plans for more firms and corporates to join.

An advisory committee with representatives from Accel, Premji Invest, and Venture Catalysts will coordinate efforts, ensuring shared objectives while preserving each fund's independence. Leadership will rotate, starting with Celesta Capital's managing partner Arun Kumar as the inaugural chair.

Geopolitical Context and Strategic Focus

Despite recent trade tensions, including U.S. tariffs on Indian goods, the alliance bets on India as a hub for foundational technologies such as AI, semiconductors, space, quantum computing, robotics, biotech, energy, and climate tech. It aims to engage with the Indian government on policy and incentives, acting as a unified voice to prevent regulatory turmoil seen in the past.

Potential Impact and Risks

This initiative could energize India's startup ecosystem, providing patient capital and support for breakthrough innovations. However, there's a risk if coordination falters, leaving promising companies underserved. As Anand Daniel of Accel stated, "Over the next decade, startups will build in India and export breakthrough solutions to the world."