Late-stage funding squeeze; ISRO opens up space

Happy Tuesday! India’s late-stage funding market is tightening, with investors writing smaller cheques and pushing for lower valuations. This and more in today’s ETtech Morning Dispatch.

Also in the letter:
■ Udaan adds Lynk to fold
■ Global IT pulls ahead
■ Karnataka, Italy explore tech ties

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India’s late-stage funding crunch shrinks cheques, cuts valuations

India’s late-stage funding squeeze is showing up in smaller cheques, lower valuations and shelved capital raises. Funding fell 38% to $5.6 billion in 2025-26, while the number of $100-million-plus rounds dropped to 13 from 23.

The deal reset:

• Navi began talks for $250-300 million at a $1.8-2 billion valuation, but Prosus eventually invested $100 million at about $1.3 billion.
• Yulu’s year-long process ended with $93 million—$63 million in equity and $30 million in debt—after it explored raising $80-100 million.
• Purplle shelved a proposed $200 million raise over valuation differences, while Emergent closed $130 million after discussions began at $200-250 million.

What is driving it:

• Few investors are willing to lead and price large rounds, stretching timelines and allowing performance projections and terms to be revisited.
• Investors are benchmarking private companies against listed peers, while founders remain anchored to earlier valuations and resist deeper resets.
• Global capital is concentrating around artificial intelligence. Startups outside favoured themes are also cutting burn, using more debt and seeking less equity in the process.

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ISRO takes NASA route, plans to outsource routine rocketry

V Narayanan, chairman, ISRO

ISRO is moving towards a new role in India’s growing space economy: letting private companies and PSUs take on the production of mature rockets and routine satellites, while it focuses on new technologies and complex missions.

What’s happening? The shift has raised concerns among ISRO employees, with nine associations seeking clarity on what it means for the agency’s future role and workforce.

But industry executives tell us that India needs more companies and manufacturing capacity to build a larger space economy. The government is targeting a $44 billion space economy by 2033, and they argue ISRO cannot achieve that scale alone.

The global path: The broader idea is similar to the approach taken by NASA and other space agencies such as ESA, JAXA where government agencies focus on strategic missions and advanced research while private companies take on more manufacturing and commercial work.

The budget gamble: The shift also comes as India seeks to expand its space programme with a smaller budget than that of major space agencies. The Department of Space has been allocated about $1.5 billion for this financial year, a fraction of NASA's $24.4 billion budget for 2025-26. The ESA has an annual budget of about $9.7 billion for 2026, while Japan’s JAXA is behind India with a budget of $1 billion.

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Udaan to acquire Swiggy-owned retail distribution company Lynk Logistics

Vaibhav Gupta, CEO, Udaan

B2B ecommerce firm Udaan is set to acquire retail distribution company Lynk Logistics from food delivery major Swiggy, according to a company statement.

Deal details:

• The transaction values Lynk Logistics at Rs 500 crore, with Swiggy set to receive a 2.8% stake in Udaan.
• Swiggy will also invest Rs 75 crore in Udaan for an additional 0.4% stake.
• Swiggy acquired Lynk Logistics in 2023 through an all-stock transaction.

Tell me more:

• The primary capital infusion being made by Swiggy values Udaan at Rs 18,750 crore (around $1.9 billion).
• The acquisition comes less than two months after Udaan raised $160 million through a mix of fresh equity, debt and debt-to-equity conversion.

CEOSpeak: "The acquisition of Lynk further strengthens our business and expands our presence across some of India’s most important consumption markets," Udaan cofounder and CEO Vaibhav Gupta, said in a statement.

W Health Ventures closes second fund at Rs 700 crore

Pankaj Jethwani, managing partner, W Health Ventures

Healthcare-focused venture capital firm W Health Ventures has closed its second fund at Rs 700 crore, exceeding its initial Rs 630 crore target.

Tell me more: W Health plans to build eight to 10 companies over the next four years, managing partner Pankaj Jethwani told us.

The fund has so far incubated two companies; cancer-care platform Everhope Oncology, built with Narayana Health, and Everbright Health, which partners with mental health practices in the US to launch and scale advanced psychiatric treatments.

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Other Top Stories By Our Reporters

Global IT firms outpace India-listed rivals on AI, consulting: Accenture, Capgemini and Cognizant harnessed their edge in systems transformation and consulting to expand toplines faster than their Indian-listed tech-services rivals in their latest reporting quarters, spotlighting the impact AI is beginning to have on revenue streams built disproportionately on application development and maintenance.

Karnataka, Italy explore startup, AI and deeptech partnerships: Karnataka and Italy are exploring partnerships in startups, artificial intelligence, deeptech, space technology and research, with the state government proposing sector-focused acceleration programmes and mechanisms to help companies enter each other’s markets.

Broking firm Upstox offers US stocks: Online brokerage firm Upstox on Monday rolled out US stocks on its platform, allowing Indian investors to punt on more than 8,000 US-listed firms and over 2,000 exchange-traded funds (ETFs).

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Global Picks We Are Reading

■ Whispering complaints into your phone may be the future of customer feedback (Wired)

■ OpenAI chief scientist warns no-one is prepared for consequences of AI (BBC)

■ What we expect from the upcoming Apple launch (TechCrunch)