Deep Tech Startups Taking Brave Risks

Context: 

This article is expressing the Great Indian Startup Boom of the last decade that was led by young entrepreneurs and catalyzed by the government’s Startup India movement.

Significance of this Gain:

• Penetration in Rural Entrepreneurs: The Startup movement is not limited to metro cities, but has been successfully achieved by suburban and rural entrepreneurs.
  • Today, there are more than one lakh startups recognised by the government, with about half of them coming from Tier 2 and Tier 3 cities. 
• A step towards Right to Livelihood & Dignity: It has created a sense of agency among India’s youth, and a sense of freedom of being able to determine their own destiny.

About Deep Tech:

• It refers to companies using emerging technologies to develop groundbreaking products. 
• It is embodied by startups and is based on significant scientific and engineering innovations.
• Included Fields: 
  • Artificial Intelligence, advanced materials, blockchain, biotechnology, robotics, drones, photonics, quantum computing, etc.
• Status in India: 
  • Currently, India is the third largest startup ecosystem in the world with more than 326 incubators and accelerators. 
  • About 14% of them are in the area of Deep Tech.
• A Risk taker for Crucial Building Capacities: The deep tech startups are the main route through which India is taking technology risks, a crucial element of any country’s process to build new capabilities.
• Creating a New Avenues: Deep tech entrepreneurship is also creating new avenues for science and technology (S&T) discoveries in the public sector labs to reach the market.
• Success in Science & Technology Sector:
  • It is easier to achieve discoveries through startups instead of licensing or patent re-assignments. 
  • This evolution provides a unique opportunity for leveraging deep historical investments in S&T in its public labs and institutions.
  • Examples: Some of the evidence of how science in public-funded institutions can reach citizens and consumers, through startups are:
    • The successes at IIT Madras’s Research Park, which has incubated over 200 deep tech companies cumulatively valued at over ₹50,000 crore including those in space and aviation.
    • The C-CAMP has in its portfolio seven deep biotech startups that have raised more than ₹550 crores.
    • The National Chemical Laboratory’s Venture Centre supports the file and commercializes high-quality patents.

Reason for retaining Risk Appetite Startup Ecosystem:

• A system-wide shared approach to measuring risk and progress during frequent rounds of funding negotiations. 
• A common vocabulary of rounds, stages, and product-market-fit is employed.
• Retaining independent decision-making across multiple venture funds and investors. 

Initiatives taken by Indian Government:

• NASSCOM’s Deep Tech Club (DTC) 2.0: 
  • Launched in 2021
  • It is aimed at scaling the impact to over 1,000 firms that are leveraging technologies such as AI, ML, Internet of Things, robotics, and blockchain.
• The Atal Innovation Mission (AIM): 
  • It is set up under the initiative of NITI Aayog which is launched to promote innovation and entrepreneurship across the country.

Challenges Faced by Deep Tech Startups:

• Lack and Underutilization of Funding: 
  • Less than 20% of startups receive financing.
  • Government funds are underutilized, and domestic capital is lacking for such startups.
• Lack of Required Skills: 
  • Talent and market access, research guidance, investors’ understanding of deep-tech, customer acquisition and cost for talent are the major challenges faced by them.

The Path Ahead:

• Adequate Funding: 
  • The availability of much larger risk capital for deep tech startups. 
  • The government must lay much more emphasis on the aforementioned sectors in the existing SIDBI Fund of Funds. 
  • Industry must increase and channel their research funds towards financing deeptech startups.
• Enabling Mass Procurement of Indigenously Developed Technologies: 
  • Industry and industry bodies have a role to play in aggregating demand in their sector, to kickstart locally-made technologies. 
  • This can be achieved through the co-creation of products and solutions at incubators, rapid testing and certification, and support to procurement of innovative goods at scale, as the government has done in some sectors.

Conclusion: Time for Startup India 2.0 

• The first iteration of Startup India and Fund of Funds inspired the Startup India movement. 
• Startup India 2.0 should direct the energies of India’s entrepreneurs towards building Indian industrial and public capabilities, to support Indian economic growth, job creation, national security, and other national capabilities.

News Source: The Hindu