Space-tech funding fall of cliff in 2024, industry expects recovery

CHENNAI: Indian space-tech startups funding declined in 2024 (YTD), for the first time since 2018, despite the overall tech startup funding scenario improving 6% with $11.3 billion investments.

Space funding fell more than 53% with a $59 million equity raise compared to $128 million last year, data sourced from Tracxn shows. While seed stage funding rose, early-stage funding dropped 65%. Despite the govt opening up certain domains in the sector in February, equity from foreign funds, full round amounts where at least one foreign investor has participated, fell 65% to $43.2 million.

But industry stakeholders see this as a blip and are hopeful of revival based on growing appetite from govt and private players and increasing commercialisation by startups.

Vishesh Rajaram, managing partner at Speciale Invest, a firm with multiple space bets, said year-on-year comparison to the sector will not show the full picture since the gestation period is longer.

“Space startups do not need growth capital every year and it cannot be compared like consumer-tech companies. Overall momentum of the ecosystem is good with startups crossing significant milestones. Also, the number of venture firms interested in the sector has gone up,” he said.

Neha Singh, co-founder of Tracxn, the market intelli- gence platform, said, “While there is a slight increase this year it is still lower than the $25.4 billion in 2022. This shows funding winter is behind for Indian startups and they are in a better place compared to global startups,” she said.

She said the recovery is expected in the space sector as companies prove their capabilities and the likelihood of traditional investors participating in the maturing players.

Awais Ahmed, chief executive and founder of Pixxel said the Indian startup ecosystem is evolving with many starting around 2015-16. “Currently fundraising happens mostly in pre-seed and seed rounds and very few companies have raised beyond that. But we can expect more companies to raise series A and beyond in coming years,” he said.

“Space is a multi-decadal thing and fruits of measures like liberalising foreign direct investments will be seen in five to10 years as companies will raise big-ticket funding in late-stages,” he said.

He said companies need to have a sight on revenue and align their technological capabilities with market demands to grow to the next stage. Lt.Gen. A K Bhatt (retd), DG of Indian Space Association said public-private partnership in ISRO’s heavy lift launcher LVM3 and IN-SPACe’s earth observation constellation will generate demand for next five years. Downstream applications in sectors like agriculture, disaster management, insurance will further boost demand; and orbital launches of Agnikul and Skyroot expected in 2025 will further boost the confidence in the sector.

“Rs 1,000 crore space VC fund announced by the govt will start operations in the next three-four months, and will help around 30 to 40 new companies at least in the preseed round in the next four to five years,” he added.



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