VCs flock to Chennai as IIT Madras helps deeptech take root

Venture capitalists (VCs) are increasingly taking flights to Chennai as they see the city emerging as a new hub for deep-tech funding, driven largely by the IIT Madras incubation ecosystem. Term sheets are being closed faster and family offices and high net-worth individuals (HNIs) are stepping in at very early stages, backed by success from the manufacturing ecosystem and proximity to Bengaluru, making it a convenient destination for regular visits. According to data from Tracxn, startups in Chennai raised more than 95 rounds in 2024, receiving $795.88 million in funding.

Deals are closing at the pre-seed or prototype stage, the academic institute said. Several VCs told ET that funds are visiting every 10 days, participating in mixers inside and outside IIT Madras, much like a standard operating procedure. IIT Madras has gained significant brand value as a startup destination, they said, adding that iTNT Hub, a state-sponsored incubator focused on acceleration and innovation, is also becoming quite active.

“There’s a higher concentration of deep-tech startups and genuinely cutting-edge work coming out of IIT Madras compared to others. While we’ve seen good startups from IIT Kharagpur, IIT Bombay and BITS, the depth and scale at IIT Madras stand out. IISc is catching up but isn't there yet,” said Ashwin Raghuraman, cofounder of Bharat Innovation Fund, an early-stage venture fund.


In 2024, IIT Madras filed 417 patents, including 119 international.

“Startups such as Agnikul Cosmos, The ePlane Company, Ather Energy, Uniphore and others have built a solid track record, and that attracts attention. That’s why you now see VCs going there every week,” said another private equity investor, who did not wish to be identified.

The IIT-Madras Incubation Cell made Rs 50 crore during the electric vehicle maker Ather’s initial public offering on its early investments. It has so far incubated 457 deep-tech startups.

“Micro VCs, family offices and HNIs are entering at earlier stages than before. There’s also a sense of urgency, as venture firms don’t want to miss out on the next big scientific breakthrough,” said Tamaswati Ghosh, CEO, IIT Madras Incubation Cell, adding that the focus is on research and development-intensive sectors.

The fund managers said overall there has been growing confidence in the Chennai ecosystem, with the city having a strong network of angels, many of whom come from software-as-a-service and IT services backgrounds, which end up investing in budding entrepreneurs locally. VCs also see potential in traditional capital areas such as Coimbatore, which can be further tapped by the startup ecosystem.

Manu Iyer, co-founder of BlueHill VC, said he has been investing in IIT Madras startups since 2016. “There’s been a clear inflection point. As strong outcomes and markups emerged, the fear of missing out kicked in, and investors started flocking here. I’ve had VCs call me saying they’ve flown to Chennai for the third or fourth time in a month,” said Iyer, an IIT Madras alumnus who sits on advisory committees of Immersive Technology and Entrepreneurship Labs.

It’s a win-win for Chennai startups as they see potential for series B and C rounds happening, which were uncommon in deep-tech earlier. VC interest from across India and countries such as the US, UAE and Japan is also being witnessed.