Tamil Nadu is home to more than 400 companies working in cutting-edge technologies – from electric mobility and robotics to semiconductor chips. The state has now emerged as one of the top deep tech startup hubs in the country, and its vibrant ecosystem has built up significant momentum. However, many startups struggle to scale beyond a point (see table).
“Govt agencies and other bodies provide early stage seed funds and grants, but there is a lack of sufficient funding beyond 50 lakh. Without access to funds, companies get into cycles of survival rather than scaling by getting into supporting services,” said Ikram Khan S I, founder and CEO at ISMO Biophotonics, which builds advanced microfluidic devices.
Deep tech startups typically stem from scientific research, have longer gestation cycles, and require significantly higher capital to build a minimum viable product and find paying customers. While Tamil Nadu offers advantages like industrial support and academic collaborations, several gaps remain. “The ecosystem in India is about 10 years old, and is relatively young. It is doing well in certain environments, backed by robust academic collaboration, research and infrastructure like IIT-M”, said Vishesh Rajaram, founder and managing partner of Speciale Invest, a venture capital firm and an early backer of Agnikul Cosmos, The ePlane and Mindgrove.
He believes the success of the startups like Agnikul will further boost the ecosystem. “Tamil Nadu’s strong industrial sector can provide a good ecosystem to build prototypes, perform validation and it is poised to benefit substantially from deep tech innovation,” he said. “The investor ecosystem is not mature enough yet to assess the risks. So, there are times when the sector does not get adequate capital, but that is bound to change,” he said.
Chirag Gupta, managing partner at 8X Ventures, which backs startups like Solinas Integrity and Xyma Analytics, is witnessing those changes firsthand. “Family offices and limited partners are interested in deep tech, but they do not have time and capacity. So they invest in VC funds and angel networks and some have started doing sizable checks,” he said. Gupta said, “Deep techs also started to understand the importance of market-fit, a change from the previous mindset of pure focus on science and engineering.”
Apart from funding, multiple startups TOI spoke highlighted other barriers and stressed the need for hand holding in standardisation, testing and certifications and supporting them in market access, including international markets. Dr Abha Bharti, co-founder and CTO of CeraTattva InnoTech, a speciality ceramic material company for high thermal applications in aerospace, defence, auto says, “A lot of traditional manufacturing companies should have adopted solutions from startups, but that has not happened at the scale it should have. There are platforms like IIT-M research park and Forge innovation and ventures, which facilitate matching the startups with the industry. We need more such initiatives to help showcase innovation and onboard customers,” she said.
Natarajan Malupillai, group CEO of IITM Research Park, who had a long career in the industry, is trying to bridge two sides. He said the state’s ecosystem had impressive growth, but it would take at least three years for the companies to scale by building a customer base, hit a consistent revenue mark and so on. He believes it would take up to seven years to have a thriving deep tech ecosystem. “We are just about getting to an inflection point with some of the big success stories. The eagerness of govt bodies to bring in investments, the availability of university-based incubation centres, coupled with the growth of global capability centres portends well for the ecosystem. Now we need to improve the outcomes,” he said. “More universities need to be incentivised to take their research into a product or a service to the market. We need a regional cluster of common innovation or incubation centres with top class R&D infrastructure,” he said.