The Rise of Conviction Capital in India's Deeptech Startups

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The Rise of Conviction Capital in India's Deeptech Startups

India's spending on research and development is low at around 0.64% of GDP. Compare that to China at 2.4% and the United States at 3.5%, and you'll see why there’s urgent talk about the need for conviction capital in India. This isn't just a numeric gap; it's a gap in potential innovation, an opportunity waiting to be seized.

Why is this crucial right now? The funding for deeptech startups in India received approximately US$ 1.6 billion in 2024, but China's investments in sectors like artificial intelligence and semiconductors dwarfed us with over US$ 12 billion. In 2025, India's deeptech funding increased to roughly US$ 2.3 billion, yet it remains largely concentrated in AI software. The broader industrial transformation is still a dream. Meanwhile, the US is leagues ahead, deploying almost US$ 90 billion, highlighting the need for conviction capital in India to fuel real innovation.

Conviction Capital: What It Is and Why India Needs It

Conviction capital isn't just about pouring money into startups. It’s about sustained, strategic investment in R&D that fuels long-term growth.

Understanding Conviction Capital

Conviction capital refers to investments made with a long-term vision, often in sectors that require significant time and resources to develop. Unlike quick returns sought by venture capitalists, conviction capital is patient, supporting the grueling journey from idea to innovation. India, with its burgeoning technology scene, needs this kind of investment more than ever.

The Current State of R&D Investment

India is currently spending around 0.64% of its GDP on R&D, trailing far behind global leaders. This lack of investment impacts the development of technologies that require years of research, such as quantum computing or biotechnology. The current focus on AI software in India is promising, but it's not enough Packaging South Asia.

Practical Implications for Indian Startups

For you, as a startup founder or tech enthusiast, this means there's an untapped potential for innovation. Investing in R&D could be your ticket to breaking new ground. But you'll need to attract conviction capital that understands and supports your long-term vision. Seek investors who are not just looking at the next quarter but at the next decade.

The Role of Government and Private Investors

Both the government and private investors have pivotal roles to play in boosting conviction capital in India.

Government Initiatives

While government policies often lay the groundwork, they need to be more aggressive. Policies should incentivize R&D spending and streamline processes for accessing funds. A shift from service-oriented projects to innovation-driven policies could set the stage for a thriving deeptech ecosystem.

Private Sector Contributions

Private investors, particularly those from FAANG-like companies in India, are starting to recognize the value of conviction capital. Their involvement can act as a catalyst for further investment in deeptech sectors beyond AI, such as robotics, blockchain, and quantum computing Indian Printer & Publisher.

What This Means for You

As an individual or business looking to dive into deeptech, aligning with investors who share your long-term vision is crucial. Consider partnerships with firms that have a track record of investing in R&D-heavy projects. This will not only provide financial backing but also enhance credibility and attract additional resources.

A Vision for the Indian Deeptech Ecosystem

For India's deeptech startups to flourish, a new mindset around investment and development must be adopted.

Embracing Broader Industrial Transformation

The current focus on AI software needs to expand. Areas like renewable energy technologies, advanced materials, and biotechnology should be on the radar. These sectors offer immense potential for both societal impact and economic growth. By broadening the focus, we can ensure that the Indian tech ecosystem is not just keeping up but leading in specific niches.

Your Role in This Ecosystem

If you're involved in a startup, research lab, or tech company, consider how your work contributes to broader industrial shifts. Are you innovating in untapped areas? Do you have a strategy to attract long-term investment? Answering these questions can position you at the forefront of India's deeptech renaissance.

The Path Forward

The road is challenging but promising. With conviction capital in India, backed by a supportive environment, there's significant potential for Indian deeptech startups to not only catch up but to innovate at a global scale. As you work on your next big idea, consider how you can contribute to this movement and what steps you can take to attract the right kind of investment.