The government has released a preliminary national policy concerning deep tech startups, suggesting amendments in nine areas like funding availability, fortification of the intellectual property system, support for deep tech startups, and facilitating shared resources and infrastructure.
One proposed measure is the establishment of a dedicated ‘deep tech capital guidance’ fund. This fund would see government involvement, contributions from private limited partners, and foreign investment into either a new or pre-existing fund through a fund of funds (FoF) structure.
The policy suggests that the primary fund in the FoF structure should have the capacity to target riskier deep tech startups for investment from the subsidiary funds. It also mentions potential fiscal benefits, like tax deductions, for domestic general partners and limited partners from the investor community (venture capitalists/angel funds) if they earmark a certain portion of their funds for deep tech startups.
As per an official announcement, the draft policy was crafted after discussions with more than 200 stakeholders. It further stated that this policy complements and enhances existing Startup India policies, programs, and initiatives by cultivating a favorable environment for deep tech startups to succeed and tackle their unique and complex problems.
The draft policy identifies that deep tech startups, with a focus on frontier technologies and digitalization, face distinct challenges in maintaining growth and navigating the ‘valley of death’ (VoD) – a critical phase where a startup is at risk of failing due to insufficient resources or revenue while trying to secure significant funding for expansion.
In order to help startups overcome the VoD, the draft policy proposes the creation of funding programs that embrace the ‘failing by design’ principle. This would assist startups in shifting and modifying strategies to grow during early stages.
The policy draft, which is open for stakeholder feedback until September 15, covers 10 sub-sectors within the deep tech ecosystem. These include sectors like 3D printing and semiconductor production; enterprise software; artificial intelligence; internet of things; robotics, and security solutions.
The policy draft was developed through multiple sessions to set priorities at the National Consortium and working group levels, as well as consultation workshops with deep tech startups in cities like Bengaluru, Hyderabad, Mumbai, and New Delhi. The statement adds that the consultations also included focused group discussions with experts, technology policy researchers, and interviews with individual thought leaders, which were anchored at academic innovation and incubation centers, multi-stakeholder roundtables, and debates.
The National Consortium, presided over by the principal scientific advisor, includes stakeholders such as government officials and industry representatives. A working group was formed to propose a comprehensive policy framework to address the needs and enhance the Indian deep tech startup ecosystem.