Skyroot has proved that homegrown startups can build rockets, but the bigger challenge may lie in funding them. A recent viral critique of Indian venture capitalists has reignited the debate over deeptech funding gaps, risk appetite of investors and slow diligence. 

Founder Grievances: For many early stage founders, deeptech funding in India remains plagued by prolonged due diligence, demands for commercial traction before validation and an over-reliance on founder pedigree. Their criticism is aimed at the current system, which may be underwriting very little genuine technological risk and backing a handful of startups.

Concentration Problem: Data adds further nuance to the debate. Deeptech funding surged 176% YoY in Q3 2026, but the deal count barely moved. This is because most of the capital was heavily concentrated among a few players and that too in Bengaluru. The pattern suggests that the capital is largely flowing to technically validated companies, while early stage founders pursuing unproven scientific experiments still struggle to secure their first cheque.

Why Investors Hesitate? Indian VCs have historically been hesitant towards deeptech bets due to the sector’s long gestation cycles, uncertain exits, specialised diligence and substantial follow-on capital. Venture funds also operate under pressure from limited partners to mint returns and liquidity within defined timelines. As a result, most VCs hesitate to underwrite these uncertain scientific bets.

Changing Ecosystem: However, the picture is not entirely bleak. Founder-led vehicles and specialist funds are expanding and raising big bucks for moonshots. Government initiatives, like the ₹1 Lakh Cr RDI Fund, are also creating more optimism around deeptech.

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