With eye on AI, deeptech funding rises 37% to $2.3bn

BENGALURU: Deeptech funding in India surged 37% year-on-year to $2.3 billion in 2025, outpacing broader venture capital growth and cementing artificial intelligence as the primary engine of the country's startup ecosystem, according to Nasscom and Zinnov's latest Indian Tech Start-up Report.

Overall tech startup funding rose 23% to $9.1 billion during the year, even as investors grew more selective and milestone focused. The report characterised the shift as a transition from "volume-driven expansion" to "execution-led maturity," with capital increasingly directed at validated, commercialisation-ready ventures.

India is now home to over 4,200 deeptech startups, including more than 550 founded in 2025. AI dominates the segment, accounting for 84% of deeptech startups and 91% of deeptech funding. Its influence spans enterprise software, cybersecurity, defence and industrial systems.

Rajesh Nambiar, president of Nasscom, said the ecosystem has entered "a more disciplined phase of growth," with AI emerging as core infrastructure for the next wave of innovation. "This signals growing global confidence in India's ability to build, deploy, and commercialize AI at scale across sectors ranging from enterprise software and cybersecurity to defense and industrial systems," he said. Despite the rebound, funding remained concentrated in early stages. Nearly 74% of total deals in 2025 were at seed and early stages. However, about 85% of seed-stage ventures failed to progress to Series A within five years, pointing to a persistent gap between proof-of-concept and scalable revenue.

Pari Natarajan, CEO of Zinnov, said the challenge has shifted from startup creation to conversion.