Indian investment landscape is evolving: venture capital turns its attention to deep tech startups

In a world where countries are actively investing in their own semiconductor production, artificial intelligence model development, and critical infrastructure, creating everything necessary independently is not always practical or mandatory. The main task is to find a balance between maintaining strategic sovereignty and the need for international cooperation.

These issues were discussed at a panel titled 'New Technological Alliances: Why Startups Around the World Need India, and Why India Needs the World' during the TechSparks 2026 event, held on October 15 in Bangalore. The discussion focused on how Indian startups can integrate into international technological ecosystems, as well as how global partners can strengthen ties with India.

The panel discussion featured Dr. Angela Honegger, CEO and Consul General of Swissnex India (Switzerland); Jakobus Johannes 'Jaap' Vermeulen, Consul General of the Kingdom of the Netherlands in Bangalore; and Peter Winter-Schmidt from the Consulate General of Denmark in Bangalore. These three representatives spoke about programs that help startups gain access to research, funding, markets, and partnerships both in India and Europe.

Winter-Schmidt emphasized that strategic sovereignty should not be equated with technological independence. He noted that while defense and security require a certain degree of sovereignty, areas such as talent, research, and technical compatibility benefit from international interaction. He cited the European Union's digital wallet as an example, which, he said, is being developed based on the Indian technology stack with support from India.

Vermeulen agreed that states must define critical elements for their own ecosystems while remaining open to partnership, stating: 'I do not believe in isolation' and stressing the importance of finding suitable partners.

Honegger also insisted on the necessity of collaboration, asserting: 'If we want a chance to win, we must cooperate.' She described Swissnex as a science consulate with six global branches, including Bangalore. Swissnex programs cover student and researcher exchange, joint research funding for Swiss-Indian teams, bilateral startup exchanges, and market validation camps. Under the program, companies from each country visit each other to explore opportunities.

As an example of cross-border cooperation, Honegger mentioned the company Suind, which operates in the fields of AI, drones, and agriculture. Founded by a Swiss and Indian entrepreneur, Suind initially opened a subsidiary in Bangalore before relocating its headquarters and subsidiary. Honegger clarified: 'Technically, it is an Indian startup with a Swiss division.'

She called on deep-tech founders in India to consider transferring part of their R&D operations to Switzerland while keeping headquarters and manufacturing in India. She added that Swiss Innovation Parks provide access to research facilities, specialized technology platforms, and government funding for joint R&D with Swiss institutions. The robotics startup CynLr from Bangalore has already opened a subsidiary in one of these parks.

Honegger also highlighted Apertus, an open-source model from Switzerland, as an example of efforts to develop publicly available AI infrastructure and prevent the concentration of control over this technology 'in the hands of a few corporations.'

Vermeulen spoke about the Netherlands' partnership with India in semiconductors, signed several months ago. This agreement covers semiconductor design, photonics, and advanced packaging, alongside manufacturing. He also reported that the Dutch semiconductor equipment manufacturer ASML is expanding its presence in India. Recently, the Dutch consulate brought 17 startups to Semicon India as part of efforts to strengthen technological ties between the two countries.

Vermeulen also mentioned the Brain Bridge program, which connects Dutch and Indian universities with Dutch companies already operating in India. Five Indian medical technology startups were selected for grants to explore opportunities in the Netherlands, and a cybersecurity mission is also planned.

Vermeulen stated: 'We see Bangalore as the Silicon Valley of Asia.' Winter-Schmidt, describing Denmark's approach to working with Indian startups, used the phrase: 'The key word for us is co-development.' He highlighted Denmark's 'Water Challenge,' which invites 10 selected Indian startups to Danish universities to work on AI-based water purification solutions. Afterward, the startups present their ideas to investors, having access to seed funding.

The Green Strategic Partnership Agreement between Denmark and India is also being extended and expanded to include space technologies, deep tech, and defense technologies. Winter-Schmidt mentioned a recent Memorandum of Understanding between DTU and IIT Madras, as well as efforts to unite venture and private investors from both countries through a 'financial bridge.' He also mentioned the Danish Impact Fund, which primarily provides loans for solutions that have a positive impact on the environment.

The three representatives gave practical advice to Indian founders aiming to enter European markets. Winter-Schmidt strongly advised startups to identify a specific market instead of viewing Europe as a monolith. He recommended that founders validate their value proposition before entering the market, dedicate time to building relationships, and be prepared to share their solutions with local partners rather than excessively protecting them.

Honegger called for greater willingness among Indian companies to take risks when working with international startups. She wanted to see a 'greater propensity for risk... to become a co-creator, not just a recipient of innovation.' She explained that Swiss startups often find that discussions with potential Indian partners end after a free pilot project. She argued that companies must be more willing to share the financial and operational risks of developing new technologies. In her view, the solution is to 'share the risk associated with innovation across several shoulders.'

During the Q&A session, an eleven-year-old founder asked how small companies navigate European regulations such as the General Data Protection Regulation (GDPR). The panel advised startups to prepare in advance, carefully select target markets, and seek advice from local partners, consultants, and consulates.

Winter-Schmidt noted that Danish companies traditionally viewed India primarily as a market offering scale. However, in his opinion, this is only part of the possibilities. He concluded: 'You come to India not for scale, you come to India for opportunities.' He also stressed that international partnership should involve learning on both sides, adding: 'We don't have that much to teach India... We can learn as much from them.'

Participants of the panel discussion at the TechSparks summit by YourStory concluded that deep technology startups in India should target global markets despite existing challenges.

The deep tech sector within the Indian startup ecosystem has emerged from the shadows and secured its niche. Although various problems exist, experts agreed that the overall situation in the sector is improving. The panel included founders from robotics, precision manufacturing, and semiconductor fields, as well as a representative from an analytical policy center. Shivani Mutanna, Senior Director of Strategic Content and Video at YourStory, moderated the discussion.

Kaushik Mudda, founder and CEO of Ethereal Machines, a precision manufacturing company, stated that his company possesses most of the necessary conditions for international competition. Shweta Rajpal Kohli, President and CEO of Startup Policy Forum, noted that thanks to significant government contributions in terms of capital and policy, the deep tech ecosystem has found its rightful place. She emphasized: 'I think the government has done many right things in creating a conducive environment. Now is the time for India to advance deep technologies.'

Today, deep technologies aim to create or possess technologies critical to the country's sovereignty. Harish Chandrasekar, co-founder of Agnit Semiconductors, noted that all ecosystems need to develop, but this will only happen over time. Agnit Semiconductors is the first vertically integrated startup in India producing gallium nitride-based semiconductors.

Gokul N A, founder of the robotics startup CynLr, highlighted the challenges faced by deep tech startups in the country, especially in their field, pointing out the lack of a complete ecosystem. He also pointed to the shortage of skilled manpower, particularly at the middle management level, adding that the country produces insufficiently high-quality engineers because its focus remains predominantly service-oriented.

The panelists agreed that the country needs clearly defined directions in the deep technology segment, which is a very broad topic. Mudda stated that it is necessary to begin forming the basic elements for becoming a manufacturing superpower. Chandrasekar stressed the importance of developing sovereign capabilities for the country in the current climate where semiconductors are used as weapons.

Access to capital is also a hurdle, although the situation has significantly improved compared to the past. Gokul noted that while seed funding has improved, more effort is required to attract long-term capital to this segment. Kohli reported that the capital problem is being addressed, particularly through the Government's Research, Development, and Innovation fund of 1 lakh crore.

Mudda suggested that raising funds up to $5 million is not a major issue for deep tech startups, but there is a deficit when attracting larger sums—from $10 to $15 million.

Regarding the role of the state as a customer for deep tech startups in the country, the panelists believe the government can act as an assistant, but startups must look towards global markets. Kohli stated that demand generation and the government's role as the first buyer are a big stimulus for any sector, but she added that the government procurement process is somewhat complex.

Chandrasekar noted that although startups would like the government to be their first client, it cannot be the only one. Gokul emphasized that deep tech requires a global market and cannot focus solely on India. In conclusion, Kohli noted that increasing the self-confidence of ecosystem participants is necessary to ensure the growth of deep technologies, stating: 'India has the talent, the scale, and everything needed. We just need to accelerate this at a feverish pace now.'