Mumbai: Investments in deep-tech start-ups, such as those driven by artificial intelligence (AI), machine learning and robotics, have touched an all-time high of $247.78 million so far in 2018, more than twice the $96.8 million in 2017, according to data from Tracxn Technologies, a data analytics firm tracking start-ups.
Deep-tech is terminology for advanced technology used to develop new business models.
In terms of ticket size, the largest investment was raised by warehousing automation and robotics start-up Grey Orange. It raised $140 million in a Series C round from Mithril Capital and Flipkart co-founder Binny Bansal, among others. It was valued at about $500 million. Mithril Capital was co-founded by legendary Silicon Valley investor Peter Thiel and Ajay Royan.
In October, Concept Medical, a health start-up that makes a special kind of catheter (sirolimus balloon coated), raised $60 million from angel investor Dr. Kiran Patel, in the second biggest tech deal in 2018.
Experts said rising investor interest in niche technology segments is driven by the growing talent pool in India. “A surge in deep-tech talent in areas such as data science, AI and ML, is driving higher interest in deep-tech start-ups,” said Sanjay Nath, managing partner, Blume Ventures.
Experts also flagged segments such as healthcare as having huge untapped potential for deep technology solutions.
“This augurs well for a country such as India given the relative shortage of good healthcare infrastructure, which is accentuated by poor doctor-patient ratios,” said Anil Joshi, managing partner, Unicorn India Ventures, an early stage investor.
On 12 November, Mint reported that funding in health-tech start-ups this year hit an all time high of $510 million. Health-tech is broadly defined as the use of technologies such as analytics, internet of things, mobile and wearable devices to improve delivery of healthcare services.
However, deal volumes in the deep-tech sector fell for the third straight year from 63 in 2016 and 58 in 2017 to 39 in 2018, indicating larger ticket sizes for individual deals—a trend seen in the broader venture space.
Mint reported on 9 October that an average seed stage round in 2018 was 25% higher than last year. According to Tracxn data, the total number of private equity and venture capital deals have fallen for the fourth year, though values have consistently risen. While the number of deals has fallen from 876 in 2015 to 659 this year, deal value has risen from $18.2 billion to $27.7 billion.
“The challenge in India has been to find AI and deep-tech companies that have scaled up in revenue, but this will be resolved with time,” said Niren Shah, managing director at Norwest Venture Partners India, which has invested in deep-tech start-ups such as RevX- a mobile marketing platform, Appnomic Systems, an IT performance-management system based on machine learning, and Attune Technologies, which provides cloud-based hospital information network, among others.