How India can Foster More Innovation in Deeptech

While consumer tech startups and deeptech startups use technology to connect problems to potential solutions; deeptech statups solutions build on scientific discoveries and/or engineering innovations.

A few Characteristics that Separate Deeptech Startups from Others -

• Startups are built on foundational discoveries at the frontiers of science and technologies
• To engineer their new ideas, they need significant capital to build at scale
• Founders and their ventures are largely mission-driven
• They create a portfolio of options.

Challenges

Though these characteristics give rise to spectacular competitive advantages, they also come with a range of challenges -

• Information asymmetry
• High capital intensity
• Hard to scale
• Need strong talent and infrastructure
• Optionality

It is therefore not uncommon to see deeptech startups work on complex and grand societal challenges. These high-risk startups come with much higher requirements for infrastructure, require funders who are more patient than usual with expectations and need access to high quality science/technology talent to realize the potential of their basic discoveries. 

Over the recent past, there has been a war of words within India’s startup ecosystem and between founders and policymakers. The Union Commerce Minister Piyush Goyal triggered this heated argument questioning if delivering groceries and making juices is good enough as innovation for an ecosystem which is considered the third largest startup ecosystem in the world. Unsurprisingly, there has been a flurry of  both supportive comments from founders of different companies.

The question remains if India needs to;, and can, foster more innovation in deeptech. One reason why this debate on newspapers and live shows seems to be more amusing than informative is the lack of clarity among many (if not most) of what comprises a deeptech startup vis-à-vis other types of startups.

This was highlighted by MIT Scholars de Apodaca, Murray, and Frolund in a paper published in 2022. Therefore, it is time we understand the definition of deeptech, the potential of deeptech startups, and then decide if spending time on these verbal duels are even a sensible allocation of time for busy founders.

All three of the above mentioned requirements of deeptech startups (infrastructure, capital, talent) remain in short supply, at least in terms of quality. High quality infrastructure refers to the latest labs and tools at reasonable prices. High quality capital refers to long-term and patient investors who can allow deep tech startups to embrace uncertainty and wait until solutions can be built at scale. High quality talent refers to the availability of scientists and engineers who can work on leading edge technologies. These are all three spaces where policymakers must play a strong role.

It is therefore not surprising that India now has a National Deeptech Startup Policy. The policy clearly addresses some of these key challenges - access to infrastructure, capital, talent and also supports intellectual property protection, regulatory standards and compliance and certifications. All of this will enable more deeptech startups in India. According to the Office of the Principal Scientific Advisor’s website as of May 2024, India already has over 10000 deeptech startups. They don’t get the attention they deserve in media and they are very difficult for most of the general public to make sense of. Given the improving policy interest, the growing rhetoric around addressing grand challenges and our demographic dividend which is heavily skewed towards science and technology, Indian policymakers should closely monitor the deeptech landscape. They should ensure a strong ecosystem is created for deeptech venture creation. Deeptech startups may be an important constituent in India’s startup portfolio if we want to be a developed nation.

--by Dr Raj Krishnan Shankar Associate Professor, Entrepreneurship, Great Lakes Institute of Management, Chennai

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