India’s Deep-Tech Start-Ups Are Finally Scaling Revenues

Deep-tech is having its first harvest season in India. In a category of investments characterised by the longest S-curve or period of uncertainty, the first batch of deep-tech start-ups are emerging that are no longer in a binary state of existence. The part of the S-curve of these start-ups in which the end outcome is 50:50: survive or die has ended.

Much to the relief of their early investors, these start-ups are now on the highway of growth. Can-die-anytime has been replaced by at least will not die. The removal of this binary state is a big win for the sector. We now have exciting companies like Chara and Skyroot that have proven the science, technology and the manufacturability of their product. These are no longer fragile bets; they are real businesses on growth trajectories.

India’s Deep-Tech Growth Challenges

India’s deep-tech opportunity today is expansive. From medical equipment to space technology, aerospace to energy, it spans areas that are rich with problems and opportunities. However, it is inherently high-risk and long-cycle. The biggest risk deep-tech start-ups face is early technology failure. Teams who identify problems to solve with deep-tech are domain experts. They are scientists, engineers or technical specialists who deeply understand the science behind the solution. Go-to-market is not on the agenda for the first few years.

It can take years to develop deep-tech products that are often conceived in labs and academic institutions. Many of these products are hardware-centric and require manufacturing in factories.

They have to go through various technology readiness levels and rigorous scientific validation. Once the science and technology hold up, only then is market potential evaluated. Compare this with an execution-first start-up like a quick commerce services company that can prove the model works in a few months. Understandably, investor capital heavily skews to models where there is no binary risk.

This limited investor appetite means deep-tech start-ups often operate with constrained capital from the outset. But deep-tech founders from our experience are far more efficient in squeezing the rupee than their peers in the execution-first spaces. It is not surprising given India as a market has white open spaces that are more visibly ripe for tech disruption.

Investors remain spoilt for choice, backing areas like commerce and entertainment where the rewards for taking extended risks are not hugely disproportionate. The expected returns from a deep-tech start-up, even if it builds a commercially viable product, are not triggering valuation-driven fear of missing out among investors yet. There are very few examples like Ultrahuman where a hardware-dependent, deep-tech-led company has successfully transitioned to attain consumer market leadership and scaled-up revenue.

Early Signals, Growing Momentum

But signs of change are beginning to show. Early wins like Ultrahuman combined with increasing visibility into revenue-generating deep-tech ventures are creating cautious optimism. Investors who were previously hesitant are now watching closely. As validation builds and more companies cross the early binary-risk chasm, sentiment is gradually shifting. Deep-tech is beginning to feel commercially real.

As the Indian economy matures, most of the large execution-first categories will be occupied by new-age tech leaders. At the same time, as more deep-tech start-ups demonstrate scale of revenue, venture capital will meaningfully shift to deep-tech. In our view, this should happen in the next two to three years.

Two events may accelerate this: use of AI helping with faster elimination of wrong choices in product development and the emergence of a few select spaces where there is ecosystem-like behaviour such as space technology. Both of these could significantly reduce the most distasteful part of deep-tech investing, which is the long wait time.

 At that point, the emergence of 10–20 deep-tech start-ups with $100mn+ revenue run-rates and $1bn+ valuations will offer the venture capital (VC) industry the proof it needs. VCs will start to believe that taking S-curve risks is worth it because even a single successful outcome has the potential to return the entire fund.

Having said that, deep-tech investors like us worry about one thing in particular as we watch this transition intently. Deep-tech founders are typically very strong at building core technology. They are skilled at working within resource and engineering constraints but often operate in a vacuum isolated from customers and market signals during the early years.

As a result, there are two major risks: first, the product might get leapfrogged by competitors before it launches and second, the founding team may not be equipped to take the product to market. This makes it important to start factoring in transition risk, specifically bringing in new leaders to complement the founders when the company is ready to scale commercially. Getting this handoff right will be key to building enduring deep-tech companies, from surviving the S-curve to sustaining momentum on the other side. Deep-tech’s dawn is here and we are excited to witness its day in the sun.