India's venture capital landscape is witnessing a fundamental shift as investors embrace deep-tech startups with unprecedented enthusiasm. After years of prioritizing quick-scaling consumer internet and software-as-a-service companies, venture capitalists are now backing hardware and advanced engineering ventures that require patient capital and decade-long development cycles.

Funding Surge Signals New Era

The transformation is evident in the numbers. According to Tracxn data, funding into Indian deep-tech startups rose significantly, demonstrating growing investor confidence in the sector.

This surge comes as investors launch dedicated deep-tech initiatives across the ecosystem. Lightspeed has sharpened its focus on India-built deep-tech companies, while Speciale Invest announced plans for a ₹1,400-crore fund. Other notable developments include Shastra VC's deep-tech fellowship, IIT Bombay's SINE launching India's first incubator-linked deep-tech VC fund, and BYT Capital debuting its ₹180-crore maiden fund.

Government Support Catalyzes Private Investment

Policy initiatives are playing a crucial role in this transformation. In April, commerce minister Piyush Goyal announced a ₹10,000-crore 'fund of funds' for deep-tech, with ₹2,000 crore earmarked for lab-to-market transitions. This government backing is helping de-risk early innovation in strategic sectors including defense, space, semiconductors, and climate technology.

"Deep tech by nature requires blended capital, patient venture funding alongside catalytic public support," said Sadhika Agarwal, who leads investments at Equirus InnovateX Fund. The approach mirrors successful policy-led initiatives in renewables and electronics manufacturing through production-linked incentive schemes.

Startup Success Stories Emerge

The changing investor mindset is evident in startup experiences. Makers Hive, a Hyderabad-based deep-tech startup, recently raised its first VC-backed bridge round of ₹10 crore from Silverneedle Ventures and is in talks for a Series A between March and May. "Now, nobody is talking about timelines. The questions are about patents, IP and what technology you are building. Earlier, it was about how fast you could scale," said founder Vempati.

Similarly, Bengaluru-based Tsalla Aerospace has seen conversations shift dramatically. "With validated technology, government contracts, real deployments and revenue visibility, VCs now engage more seriously. The tone has shifted from 'prove this can work' to 'how big can this get,'" explained founder and CEO Vinayak Tsalla.

Traditional VC Dominance Gives Way

Historically, India's VC ecosystem has been dominated by sectors offering quick returns. According to Bain and Co.'s venture capital report 2025, consumer internet, fintech, and SaaS together accounted for 60-70% of VC investment value in 2024.

Despite this progress, deep-tech still represents a smaller portion of total VC investment, though its share is growing as investors recognize the sector's strategic importance and long-term value potential.

The Valley of Death Challenge

While funding availability has improved at the pre-seed stage, significant gaps remain in later rounds. "Pre-seed funding has improved significantly, but capital thins out sharply at Seed and Series A/B, especially for companies building original technology rather than services," noted Vinayak of Tsalla Aerospace.

This "valley of death" typically occurs between technology readiness levels 4 and 7, when startups have proven their technology in labs but need substantial capital for commercial-scale production. "Early-stage money exists, and growth-stage capital comes once the technology is proven. The problem is the middle," said Amit Chand, founder of BYT Capital.

Road Ahead: Patience and Persistence

Investors are adapting their strategies for deep-tech's unique requirements. Venture capitalists are restructuring fund tenures, deployment schedules, and follow-on strategies to accommodate longer development cycles. "Longer tenures and extended harvesting periods are becoming the norm," said Agarwal from Equirus.

The sector's potential is evident in global success stories, with a nearly 6x increase in global deep-tech unicorn exits between 2018 and 2022. Recent high-profile acquisitions include Google's $32 billion purchase of cloud security leader Wiz and Marvell Technology's $3 billion acquisition of Celestial AI.

As Vishesh Rajaram, co-founder and managing partner at Speciale Invest, observed: "Deep-tech doesn't change to fit venture capital. Venture capital has to adapt and learn." The question now is whether this new wave of patient capital will successfully bridge the funding gaps and help Indian deep-tech startups achieve their full potential.

Deep Polymers Limited has announced its unaudited financial results for the second quarter and half-year ended September 30, revealing a mixed performance with some areas of concern highlighted by the auditors.

Financial Highlights

For the quarter ended September 30, Deep Polymers reported:

• Revenue from operations of Rs. 2,575.01 crore, up from Rs. 2,540.01 crore in the previous quarter
• Net profit of Rs. 174.59 crore, compared to Rs. 144.19 crore in the previous quarter
• Basic and diluted earnings per share of Rs. 0.72

For the half-year ended September 30:

• Revenue from operations stood at Rs. 5,115.02 crore
• Net profit reached Rs. 318.78 crore
• Basic and diluted earnings per share were Rs. 1.32

Segment Performance

The company's operations are divided into three geographical segments:

Auditor's Qualifications

The statutory auditors, S N Shah & Associates, issued a qualified opinion on the financial results, highlighting two key concerns:

1. Trade Receivables: The auditors noted that trade receivables include Rs. 166.72 crore outstanding, for which the company has initiated legal recovery procedures. The auditors believe a provision for doubtful debts should have been made, potentially overstating profits and current trade receivables.

2. Foreign Currency Restatement: The company has not restated monetary items denominated in foreign currencies at the end of the reporting period, as required by Ind-AS-21. This non-compliance may result in overstatement or understatement of foreign currency denominated items and affect reported profits.

Management's Response

The company's management has stated that they are taking appropriate measures for recovery of the outstanding trade receivables and are hopeful of recovery in the coming financial year. Regarding the foreign currency restatement, management deemed the impact not material enough to significantly affect profitability or net worth but acknowledged the non-compliance and committed to taking appropriate action in the coming year.

Board Meeting

The board meeting to approve these results was held on November 14.

Deep Polymers Limited's performance shows growth in revenue and profit compared to the previous quarter. However, the qualified audit opinion raises concerns about the company's financial reporting practices and potential overstatement of profits. Investors and stakeholders may want to closely monitor the company's actions to address these issues in the coming quarters.