India's Deeptech Funding Gap: Skyroot Built Rockets, VCs Hesitate

Skyroot has shown that Indian startups can build rockets. The harder question, a growing number of founders argue, is whether Indian venture capital can fund the next generation of such moonshots.

A viral critique of Indian VCs has reopened the debate. Early-stage deeptech founders cite prolonged due diligence, demands for commercial traction before the science is validated, and heavy reliance on founder pedigree. In their view, the system underwrites little genuine technological risk and backs only a handful of startups.

Money is flowing, but to few

The data adds nuance. Deeptech funding rose 176% year on year in Q3 2026, but the number of deals barely changed. Most of the capital went to a small set of companies, largely in Bengaluru. That suggests investors are favouring technically validated businesses, while founders pursuing unproven scientific experiments still struggle to land a first cheque.

The hesitation has structural causes: long gestation cycles, uncertain exits, specialised diligence and large follow-on capital needs. Funds also face pressure from limited partners to deliver returns and liquidity within fixed timelines.

Signs of change

The picture is not entirely bleak. Founder-led vehicles and specialist funds are expanding and raising sizeable pools for moonshots, and government initiatives such as the ₹1 lakh crore RDI Fund have lifted sentiment. Still, capital alone will not close the gap. Frontier ventures need stronger follow-on funding, patient limited partners and corporate customers willing to buy early products.

Weekly funding snapshot

Indian startups raised $130.2 million last week, down 29% from $184 million a week earlier, though deal count rose 88% to 32. Cent ($15 million) and Simplismart ($14 million) landed the largest rounds. Ecommerce led by sector with $33 million across nine deals, followed by AI with $30 million across five. Blume Ventures and Antler were the most active investors, each backing three startups.