Karnataka, IVCA explore co-investment plan for DeepTech

Karnataka and the Indian Venture and Alternate Capital Association are exploring a government-investor co-investment framework for DeepTech companies. The proposal emerged from a roundtable in Bengaluru chaired by Minister Priyank Kharge.

The discussion focused on how to move Indian DeepTech ventures from research and demonstration to wider commercial use. Participants from investment firms, startups, government, research institutions and industry identified joint funding, intellectual property, research and development, procurement, manufacturing and market access as the main areas for action.

A proposed state-level model would support collaboration between the government and investors, with participants backing a pilot before any wider rollout. They also identified a joint framework for government-investor collaboration as a next step.

Karnataka outlined what it described as a Government First approach for startups working on public sector problems. Under the model, the state would support pilots, funding, sandbox environments and access to government databases.

Officials said the state would also explore shared access to Graphics Processing Units through existing facilities. Investors and other ecosystem participants were invited to engage with Karnataka's Centres of Excellence.

Funding gap

A key issue raised at the meeting was a shortage of capital at the research and proof-of-concept stages, especially at Technology Readiness Levels 1 to 3. Participants said DeepTech founders need more patient domestic capital and clearer paths to later funding rounds.

Another challenge was the gap between successful pilots and paid contracts. Startups can demonstrate technologies but still struggle to win first customers, procurement orders and repeat business in India.

Manufacturing and related infrastructure were also highlighted as priorities. Proposals included investor-run Centres of Excellence, shared rapid-prototyping facilities, better access to compute resources and faster approvals for hardware and manufacturing ventures.

Participants also pointed to opportunities for Indian companies in imported components, specialty materials and other critical subsystems. Stronger domestic demand, they said, could help support those efforts.

The roundtable also examined the government's role as an early buyer and considered procurement opportunities beyond finished products, including components and suppliers. It also discussed closer links between startups, corporates and Global Capability Centres.

Market access

Attendees called for better access to overseas markets and greater visibility for founders in Tier II and Tier III cities. They also urged a more coordinated approach to connecting research, investment and industry.

Priyank Kharge, Minister for Home Affairs, Information Technology, Biotechnology and E-Governance, Government of Karnataka, said: "Karnataka has always believed that innovation must translate into real-world impact. Our focus is on creating an environment where DeepTech startups can move beyond research and successful pilots to commercial deployment and scale. Through our Government First approach, we want to provide startups with opportunities to test, validate and deploy solutions to public challenges, while improving access to infrastructure, technology and markets.

"We are also keen to explore stronger collaboration with the investor community, including co-investment opportunities, to support promising technologies and build globally competitive companies from Karnataka."

Rajat Tandon, President, IVCA, said: "India has made significant progress in building its DeepTech ecosystem, but the next phase depends on bridging innovation and commercialisation. Access to patient capital at the research and proof-of-concept stages remains critical, alongside pathways to first customers, manufacturing and scale. Our discussions with the Government of Karnataka highlight opportunities for investors, government and industry to collaborate.

"At IVCA, our partnership with Headstart will support DeepTech startups beyond metros, across India's hinterlands. We will also collaborate with state and central governments to engage more corporates and GCCs in our DeepTech initiatives, developing practical models for co-investment, technology adoption and long-term growth."

IVCA represents more than 500 funds with combined assets under management of more than USD $350 billion, according to the association.