VC fund to boost startup participation in space sector

The Rs 1,000 crore venture capital fund that finance minister Nirmala Sitharaman proposed for investments in the space economy will improve the availability of early-stage funding and significantly boost the participation of startups in the sector, investors and founders said.

In her budget speech Tuesday, Sitharaman described the fund as the government’s “continued emphasis on expanding the space economy by five times in the next 10 years”.

The Indian space economy will be worth $13 billion by 2025, according to Invest India, the government’s investment promotion agency.


The minister did not elaborate on which entity will set up the fund or how the money will be invested.

The fund would help new entrepreneurs get easier equity investments when they’re at a venture capital stage, said Pawan K Goenka, chairman of the Indian National Space Promotion and Authorisation Centre (IN-SPACe), the private space sector regulator. “At IN-SPACe, we look forward to supporting the growth of the space economy and nurturing an enabling ecosystem for NGEs (non-government entities),” he added.

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The Indian space ecosystem is home to a diverse set of startups, from Skyroot and Agnikul that build launch vehicles and Digantara, Pixxel and GalaxEye which make satellites with unique payloads, to satellite data analytical firms such as SatSure. All of these will benefit from the increased government focus, veteran deep-tech investor and founding partner of Yali Capital Ganapathy Subramaniam said.

Calling the announcement “wonderful news”, Srinath Ravichandran, cofounder of space-tech startup Agnikul said it would encourage the emergence of larger players in the space startup ecosystem.

Chennai-based Agnikul Cosmos established the country’s first private launchpad and mission control centre on the Isro campus at the Satish Dhawan Space Centre, Sriharikota in November 2022. It launched the world’s first rocket equipped with a 3D-printed engine on May 30 this year.

“This fund will provide crucial financial support to innovative startups and companies… While we recognise that even larger funds will be needed as the sector grows, this is an excellent start and a vital stepping stone,” said Awais Ahmed, cofounder and chief executive of Pixxel.

The new fund will also augment the benefits brought on by the changes in foreign direct investments for space startups notified in April this year, said Vishesh Rajaram, managing partner at venture capital firm Speciale Invest.

The government had allowed 74% FDI for satellite manufacturing, up to 49% for launch vehicles and 100% for manufacturing of components and systems, all under the automatic route.