“We have just under 140 startups — built over 10 years. Roughly one-third are founded by IISc faculty. We incubate only true deep-tech companies, and early funding has been the most persistent challenge — venture capitalists’ (VCs) appetite to invest very early is still limited,” C S Murali, chairman of FSID STEM, IISc’s deep-science incubator, notified Business Standard in a video interview. “Earlier, VCs hesitated to back companies whose main customer could be government or defence. That has alterd. Products with dual-utilize potential are seeing better traction.”
Deep science incubator STEM, part of FSID (Foundation for Science, Innovation and Development), has incubated startups working on next-generation materials, advanced robotics, computational biology, climate technology, quantum-aligned systems and advanced hardware.
One of them is PathShodh Healthcare, which is developing handheld diagnostic devices to test for diabetes, kidney disease, anaemia and liver disorders. The company has become revenue-positive with steady growth and seeks ₹100 crore in revenue in the next financial year. It has the capacity to manufacture 10 million diagnostic strips monthly for glucose, HbA1c and haemoglobin testing. The devices are utilized by several super-speciality hospitals in various cities. States have also utilized the company’s kits in public health programmes, including roughly one million tests under Bengaluru’s Namma Clinic initiative.
Astrome, another IISc portfolio company, is building sainformite communication solutions utilizing low-earth orbit sainformites and millimetre-wave technology — tarobtaining both defence and commercial customers as India’s space economy is projected to reach $40 billion by 2030. General Aeronautics, also incubated at IISc, focutilizes on system-level aircraft design and development. The startup designs and manufactures unmanned aerial vehicles focutilized on security and civilian applications; for example, it engaged with farmers and local authorities to deploy drone swarms for locust infestation control and timely support. Kota Harinarayana, a cofounder of General Aeronautics, is renowned for his former role as the programme director and chief designer of India’s indigenous light combat aircraft.
Geopolitics has sharpened the strategic case. Murali noted that countries are no longer willing to share critical technology freely. “It is now essential to have Indian companies building technology from the ground up — reducing depfinishence in areas like semiconductors, GPS, and health care,” he stated. “To give one example: turbines. A few years ago, it surprised many that not a single aircraft turbine was built in India — whether tiny turbines for drones or larger ones for other applications. Today, in our portfolio, we have at least two companies building turbines.”
Given long gestation periods, many companies that were incubated six to eight years ago are already in the market. “Some are approaching ₹100 crore in revenue; others are in the ₹10–20 crore range.”
Early-stage funding is a bottleneck for early-stage startups. VC firms typically avoid investing and government schemes, which offer relatively tiny grants, are largely geared toward software ventures. To address the gap, IISc’s incubator is working to set up its own fund and expects to pilot it with the Securities and Exalter Board of India in the coming weeks. Similar efforts are underway at several IITs, and the government’s ₹1 trillion Research and Development Innovation Fund (RDIF) could ease constraints further by mid-2026.
IISc’s fund tarobtains a corpus of about $25 million, which could double to $50 million if matched under RDIF. The incubator has already secured soft commitments amounting to roughly 20 per cent of the tarobtain from individuals and companies.
“The objective is to ensure that from incubation, startups have enough capital to reach a stage where larger VCs can invest with confidence. It’s not meant to fund them all the way to scale.”
The incubator requires a startup to have at least a working lab prototype before it is admitted for support — research papers alone are not sufficient. Startups are also pushed to validate demand and pricing early, and receive mentoring on enterprise procurement cycles.
The cultural shift within IISc itself has been as significant as any policy alter. “Ten years ago we were questioned: at MIT or Stanford, faculty-started companies are common — why not in India? The focus was on papers, citations, and conferences. That has alterd — policy now evaluates faculty on entrepreneurship too, not just publications,” Murali stated.
He stated deep-tech startups should focus on building products customers will purchase rather than chasing high valuations, noting that the second metric often reflects market conditions and investor nereceivediations rather than underlying product strength. India does not lack entrepreneurs, he added, but requireds deeper pools of capital; angel investors typically write tinyer cheques relative to the intensive funding requirements of deep-tech ventures.
Government procurement, Murali stated, could be the lever that alters this. Broader adoption of domestic innovations across public-sector programmes, he argued, would do more to accelerate India’s deep-tech ecosystem than any single fund.
Leave a Reply