Skyroot has proved that homegrown startups can build rockets, but the bigger challenge may lie in funding them. A recent viral critique of Indian venture capitalists has reignited the debate over deeptech funding gaps, risk appetite of investors and slow diligence.
Founder Grievances: For many early stage founders, deeptech funding in India remains plagued by prolonged due diligence, demands for commercial traction before validation and an over-reliance on founder pedigree. Their criticism is aimed at the current system, which may be underwriting very little genuine technological risk and backing a handful of startups.
Concentration Problem: Data adds further nuance to the debate. Deeptech funding surged 176% YoY in Q3 2026, but the deal count barely moved. This is because most of the capital was heavily concentrated among a few players and that too in Bengaluru. The pattern suggests that the capital is largely flowing to technically validated companies, while early stage founders pursuing unproven scientific experiments still struggle to secure their first cheque.
Why Investors Hesitate? Indian VCs have historically been hesitant towards deeptech bets due to the sector’s long gestation cycles, uncertain exits, specialised diligence and substantial follow-on capital. Venture funds also operate under pressure from limited partners to mint returns and liquidity within defined timelines. As a result, most VCs hesitate to underwrite these uncertain scientific bets.
Changing Ecosystem: However, the picture is not entirely bleak. Founder-led vehicles and specialist funds are expanding and raising big bucks for moonshots. Government initiatives, like the ₹1 Lakh Cr RDI Fund, are also creating more optimism around deeptech. But capital alone will not solve the problem as local frontier ventures still need stronger follow-on funding, patient limited partners and the corporate willing to buy early products.
Indian founders have proved that they can build rockets, but can VCs now step in and show that they can finance these moonshot bets? Let’s find out…
India has pursued indigenous jet-engine capability for decades now, but to no avail. This has created heavy dependence on overseas vendors and costly testing. D-Propulse is betting on a new technology to build lighter, cheaper propulsion for high-speed drones and missiles.
The RDE Approach: Founded in 2025, D-Propulse is developing rotating detonation engines (RDEs), which use supersonic detonation waves to generate thrust. It has already tested a 5 kN air-breathing RDE that is currently at technology readiness level-5. The startup claims its engine will be 15-25% more efficient and at least 60% less expensive than conventional ramjets.
Eye On The Prize: To scale its ambitions, the startup is also building a 5,000+ sq ft combustor test facility at IIT Madras, with air mass flow capacity of around 10 kg/sec and an in-house HPC cluster. It is also exploring infrastructure rental as an early revenue stream while its jet engine business takes shape.
Building For Defence: D-Propulse is targeting the Indian Armed Forces as its intended first customers. It now plans to conduct flight tests between June and December 2027 and limited series production by the end of 2028. The pre-revenue startup also plans to raise a Series A round by early next year.
With the global RDE opportunity projected to surpass $2.4 Bn by 2030, can D-Propulse build commercially viable jet engines for India?
From unicorns to promising new-age tech startups, here are the IIM Ahmedabad graduates that took the entrepreneurial route and built enduring companies in the Indian startup ecosystem…
Source: Inc42
