US and Indian VCs Launch $1B+ Deep Tech Fund for India

A New Alliance to Fuel India's Deep Tech Sector

A coalition of eight U.S. and Indian venture capital and private equity firms – including prominent investors such as Accel, Blume Ventures, Celesta Capital, and Premji Invest – has been established to bolster India’s deep tech startups. This group is collectively committing over $1 billion over the coming decade to strengthen technological collaboration between the U.S. and India.

Addressing Funding Gaps and Concerns

This alliance directly responds to persistent concerns regarding funding availability. Earlier this year, India’s Commerce Minister Piyush Goyal faced scrutiny for his critique of domestic startups’ focus on areas like food delivery, contrasting them with Chinese innovation. Investors and founders countered that a lack of sufficient capital for deep tech ventures was a key issue, and that Goyal’s remarks didn’t fully acknowledge the dedication of founders serving the local market.

The newly formed alliance aims to rectify this situation by directing sustained private investment into deep tech companies, which many founders have found challenging to fund within India.

An Unusual Collaborative Approach

This initiative is noteworthy because investors generally compete for investment opportunities rather than formally uniting under a named alliance with defined commitments. While co-investment is common, cross-border collaboration typically occurs informally through individual fund strategies, not through coordinated capital groups.

Introducing the India Deep Tech Investment Alliance

The group, officially named the India Deep Tech Investment Alliance, comprises Celesta Capital, Accel, Blume Ventures, Gaja Capital, Ideaspring Capital, Premji Invest, Tenacity Ventures, and Venture Catalysts. This was announced in a joint statement on Tuesday.

The launch coincides with the Indian government’s approval of a ₹1 trillion (roughly $11 billion) Research, Development, and Innovation (RDI) scheme, unveiled in the national budget earlier this year to stimulate deep tech research and development.

Alliance Commitments and Focus

Each member of the alliance will dedicate private capital over a period of five to ten years to Indian-domiciled deep tech startups. Currently, the number of such companies is limited, as many Indian-founded deep tech ventures are incorporated in the U.S.

However, New Delhi now requires local incorporation for companies seeking incentives under the new RDI scheme, a condition the alliance members intend to utilize.

Beyond Funding: Mentorship and Market Access

In addition to financial support, the alliance members will provide mentorship and access to their professional networks. They also plan to leverage the alliance to facilitate the expansion of their portfolio companies into the Indian market.

Strategic Alignment with Governmental Goals

“This initiative aligns with the strategic objectives of both India and the U.S. at the governmental level, with a focus on critical and emerging technologies,” stated Arun Kumar, managing partner at Celesta Capital, who will serve as the alliance’s inaugural chair.

Navigating Geopolitical Complexities

The initiative unfolds against a complex geopolitical landscape. The TRUST (Transforming the Relationship Utilizing Strategic Technology) initiative, launched by President Donald Trump and Prime Minister Narendra Modi, aimed to deepen U.S.-India tech ties.

However, relations experienced strain when Trump imposed a 50% tariff on Indian goods last month due to New Delhi’s continued purchases of Russian oil, a move that analysts suggest has positioned the two leaders on diverging paths regarding trade and geopolitics.

Betting on India's Deep Tech Potential

Despite these tensions, the alliance is confident in India’s potential as a hub for startups developing foundational technologies, including AI, semiconductors, space technology, quantum computing, robotics, biotechnology, and solutions for energy and climate change.

Expanding into the Indian Market

“We view India as a particularly compelling market, not only for the opportunities presented by new companies originating in India, but also for U.S. companies seeking to expand their presence within India,” explained Sriram Viswanathan, founding managing partner at Celesta Capital, in an interview with TechCrunch.

Celesta Capital's Leadership Role

Celesta Capital, an early investor in Indian startups like Agnikul (space-tech), IdeaForge (drone maker), and OneCell Diagnostics (AI-driven cancer diagnostics), spearheaded this effort following discussions with industry stakeholders and the Indian government.

“Our goal is to invigorate the ecosystem and unite investors with shared perspectives,” Viswanathan added.

Focus on Early-Stage Investments

The alliance will concentrate on early-stage startups – from seed funding through Series B – and will avoid late-stage investments. Viswanathan emphasized that the $1 billion-plus commitment represents just the beginning, stating, “Every significant undertaking begins with an initial step.”

He anticipates further firms, including both financial VCs and private equity firms, joining the alliance, as well as corporate entities with substantial investment programs.

Alignment with Government Requirements

While the alliance doesn’t establish specific eligibility criteria for new members, Viswanathan stated that participants must meet the Indian government’s requirements under the RDI scheme, including investing in “sunrise” sectors, supporting India-domiciled startups, and obtaining necessary local regulatory approvals.

“The alliance serves as a platform for engaging with the government,” he clarified.

A Unified Voice for Industry Interests

Collectively, the alliance’s investors plan to engage with the Indian government on policy and incentives to promote the interests of the private sector and act as a unified voice.

Past instances of regulatory changes implemented without industry consultation have caused disruption in India, drawing criticism from U.S. investors and, in some cases, leading to reversals following widespread opposition.

Information Sharing and Collaboration

The alliance members will voluntarily share information and coordinate on pipeline development, due diligence, and potential co-investment opportunities.

Governance and Leadership

An advisory committee, consisting of representatives from Accel, Premji Invest, and Venture Catalysts, will help define shared objectives and ensure coordination while maintaining the independence of each fund.

Kumar noted that while he is the initial chair, the alliance’s leadership will rotate as the organization evolves.

Potential Benefits and Risks

This alliance could be a catalyst for Indian deep tech startups, providing long-term capital and a unified voice to the government. However, there is a risk that a lack of coordination could leave promising companies unsupported.

A Positive Outlook for the Future

“Over the next decade, startups will innovate in India and deliver groundbreaking solutions globally. The conditions are favorable: ambition, talent, policy support, and patient capital,” stated Anand Daniel, partner at Accel, in a prepared statement.