Mint DIS 2023 | ‘Investing in deep-tech startups more an art than science’

Investing in homegrown deep-tech startups — a category that loosely groups together emerging tech fields such as AI, robotics, quantum computing, mixed reality, space and more — is “more of an art than science,” opined a panel at Mint Digital Innovation Summit on 9 June.

Highlighting the metrics used in evaluating deep-tech startups, Roopan Aulakh, managing director at venture capital firm Pi Ventures, said, “The investor, since 2017, has been funding intellectual property (IP)-led start-ups. Typically, the underlying IP of a deep-tech company is unique and hard to recreate, resulting in a significant competitive advantage that it is more of an art, than science.”

Underlining some of the bets that Aulakh has placed, Pi Ventures’ deep-tech investments include space-tech firm Agnikul Cosmos, robotic logistics firm Ottonomy, and more.

Industry body Nasscom’s annual Strategic Report, published this year in March 2023, highlighted that out of a total of 27,000 homegrown startups, 3,200 are deep-tech in terms of their category — accounting for over 12% of the country’s startup ecosystem.

Rajesh Sehgal, managing partner at Mumbai-based venture capital firm Equanimity Investments, concurred with Aulakh, adding that evaluating deep-tech startups in terms of how they could be valued at any early stage varies significantly across sectors.

“Whether it’s agritech or health-tech or artificial intelligence and machine learning, understanding of what the tech the company delivers, and its sustainability play a big role in the evaluation process,” Sehgal said.

Underlining this, Sehgal said, “Many deep-tech firms require huge physical infrastructure, or devices to be deployed on ground. That could be very tricky. For instance, I can’t even imagine self-driving cars actually working out on Indian roads in the near future. But, a venture that solves a core tech issue using mobile devices or sensors make more sense, since they would be easier to deploy.”

Aulakh added, “Investors seek to understand how the underlying technology would address and solve a specific problem, that is within the need of the time.” Further, founders also play an important role in the way deep-tech firms are assessed.

“Of course, we invest in early-stage startups, so it is not always possible for founders to be skilled in every aspect. But, it is important that the founders have both business and technology skills, or at upskill themselves to meet market and business demands,” she said.