IIT Madras-backed deeptech fund raises Rs 453cr in first close | India Business News

IITM, Unicorn India announce first close of Rs 1,000 cr deeptech fund

BENGALURU: IIT Madras and venture capital firm Unicorn India Ventures have announced the first close of about Rs 450 crore for their Rs 1,000-crore deeptech fund, with roughly a third of the capital coming from overseas investors. The fund will back capital-intensive startups that can take years to reach commercial scale.IITM Unicorn Frontier Fund I, announced earlier this year with a target corpus of Rs 1,000 crore, has already deployed nearly Rs 55 crore across four companies — quantum startup Quanstra, spacetech firm Hathor Rocket, battery startup Triolt Energy and carbon-capture company Carbelim. Individual cheques have ranged from Rs 10 crore to Rs 20 crore.Bhaskar Majumdar, managing partner at Unicorn India Ventures, told TOI that most of the fund’s capital so far has come from individuals and family offices rather than institutional investors. About a third of the first-close capital has come from overseas investors and the remaining two-thirds from India, he said. IIT Madras alumni have played a significant role in the fundraise, though the fund has not disclosed individual LP names.The fund is targeting its final close by the end of the year. IIT Madras director V Kamakoti said the initial plan was for a much smaller fund, but interest from alumni and investors gave the partners confidence to scale up the vehicle. The fund has closed at Rs 453 crore, against an initial expectation of around Rs 250 crore, he said.The partners are positioning the fund as patient capital for deeptech companies, where commercialisation cycles can stretch far beyond those of software startups. Majumdar said only about 25% of the corpus is expected to be deployed as first cheques, leaving room to back portfolio companies in subsequent rounds.“When any of the four companies today need a next round of Rs 50 crore, we will be there again,” he said. The fund is being built with an eight-to-10-year investment horizon, he added.The long gestation periods are also changing how deeptech companies are valued, Majumdar said. He cited semiconductor and space startups, where a technological milestone such as a tape-out or launch can significantly change a company’s valuation even before meaningful revenue begins to flow. Conventional cash-flow-based valuation frameworks often struggle to capture such businesses, he said.Kamakoti, however, said access to capital is increasingly only one part of the challenge. The next hurdle is getting large Indian companies to become customers of homegrown startups. “What we need today is bigger industries to get from these fellows,” he said, arguing that even relatively small purchase orders can help young companies establish market credibility.Majumdar echoed the view, saying govt agencies have often emerged as first customers for defence and semiconductor startups, while large private enterprises still need to step up adoption.IIT Madras will remain at arm’s length from investment decisions, Kamakoti said. The fund is open to startups across India, with an independent investment process determining which companies receive capital.Kamakoti pointed to Ather Energy as an example of the long-term model IIT Madras hopes to replicate. An investment of roughly Rs 15 lakh made more than a decade ago has grown into a stake valued at about Rs 229 crore, he said.