India's Deep Tech Funding Jumps 58% in 2025

- The India Deep Tech Alliance (IDTA) is a key driver of this funding surge, with capital commitments of over $2.5 billion from a consortium of Indian and global investors. Its members include prominent venture capital firms like Accel, Celesta Capital, and Premji Invest, alongside strategic corporate partners such as Nvidia and Qualcomm Ventures. - There's a noticeable "valley of death" in the Indian deep tech funding landscape, with late-stage funding totaling only $345.5 million in 2025, which is less than a third of the capital deployed at the early stages. This indicates a structural gap in growth-stage funding for companies looking to scale, despite a fivefold increase in the average seed investment size between 2016 and 2023. - In terms of deal structures, seed rounds for Indian deep tech startups typically range from $500,000 to $3 million. While early-stage funding reached a record $971.9 million in 2025, the number of deals declined, signaling a concentration of capital into fewer, more promising ventures. - The government's Production Linked Incentive (PLI) scheme, with an outlay of approximately $10 billion, is significantly influencing deal flow in the semiconductor industry. This has spurred major M&A and investment activities, including projects from Tata Group, Micron Technology, and a joint venture between HCL and Foxconn. - The TMT sector saw significant M&A activity in 2025, driven by a push for AI capabilities. A notable transaction was the mid-cap IT firm Coforge acquiring the US-based AI engineering services firm Encora in a deal valued at $2.35 billion from private equity investors Advent International and Warburg Pincus. - While specific valuation multiples for Indian deep tech firms are not widely disclosed, the global trend for AI startups suggests a broad range of 10x to 50x revenue multiples. The median is typically between 20x-30x, with foundational model and core infrastructure companies commanding the highest premiums. - There is a clear strategic pivot in M&A from consumer-focused tech to deep tech and enterprise AI. Indian IT firms saw a 33% increase in M&A activity in 2025, with deals worth approximately $743 million by late December, largely to acquire AI capabilities. - Private equity is playing an increasingly dominant role, with buyout deals in India growing fourfold since 2010. In 2025, sectors like technology, financial services, and infrastructure attracted the most PE investment, with a noticeable trend towards control-oriented deals to drive value creation.