The Union Ministry of Science and Technology has appointed the first set of second-level fund managers who will channel capital from the Research, Development and Innovation Fund (RDIF) into deeptech startups.
These fund managers included 14 private equity and venture capital firms and five research organisations. The PE and VC firms include TVS Capital Funds, Blume Ventures, Speciale Invest Growth Fund, YourNest Capital, Sixth Sense Ventures, Chiratae Ventures, Kalaari Capital, AdvantEdge, IvyCap Ventures, and Ideaspring Capital.
The research organisations are the AI & Robotics Technology Park at the Indian Institute of Science, Bengaluru; the Centre for Cellular and Molecular Platforms in Bengaluru; the IIT Madras Research Park; Pilani Innovation & Entrepreneurship Development Society at BITS Pilani; and Society For Innovation & Entrepreneurship at IIT Bombay.
Here is a quick explainer on how private equity and venture capital funds as well as startups could be affected.
What is the RDI Fund?
This is a Rs 1 trillion fund (about $10.5 billion) which was announced in November 2025. The fund will invest in other funds and research organisations, which will then invest in deeptech startups and innovation.
How much capital will be deployed?
At first, the 19 selected fund managers will deploy Rs 7,131 crore. Essentially, RDI Fund will act as a limited partner to PE/VC funds. But the fund managers won’t get equal amounts. The allocation will likely depend on fund size, investment opportunities they identify and other parameters.
How will RDI Fund be different from SIDBI Fund of Funds for Startups and Self-Reliant India (SRI) Fund?
“These are complementary initiatives, but they address different financing needs,” Rajat Tandon, President of the Indian Venture and Alternate Capital Association (IVCA), told VCCircle.
“SIDBI's Fund of Funds for Startups has played an important role in strengthening the venture capital ecosystem, while the SRI Fund focuses on providing growth capital to MSMEs,” he said.
Which startups stand to benefit?
Startups whose activities are at technology readiness level (TRL) 4 and above, or after their products have been validated in a laboratory environment, will get the funding.
However, this may not apply strictly. Tandon said this is just a “general threshold, rather than a rigid technical classification”. “The fund is intended to support commercialisation-focused projects rather than basic or applied research,” he added.
Will it be restricted to startups in healthcare and digital sectors, as is generally believed?
No, the startups won’t be restricted to only these sectors.
Tandon said that several strategic sectors including advanced manufacturing, biotechnology, AI, robotics, quantum technologies, space and energy transition stand to gain.
Vishesh Rajaram, founding partner at Speciale Invest, said that the biggest beneficiaries will be companies in space, semiconductors and chip design, defence and autonomous systems, quantum-secure communications, advanced energy including nuclear, and robotics.
What is the significance of TRL 4?
Tandon said that there is a “significant funding gap” between laboratory validation and commercialisation.
Richa Bajpai, founder of Campus Fund, one of the AIFs chosen under the RDIF and one that has been active in this space, said: “The hardest stretch for a deeptech company in India is the one between a working lab prototype and its first institutional cheque. Grants and university support usually run out at proof of concept, and most venture capital arrives only once there is revenue. Many of India’s best research-driven founders get stuck in that gap, and some leave the country to close it.”
Speciale Invest's Rajaram said that RDIF’s positioning addresses three gaps. “The first is the post-prototype scale-up phase, where companies need large cheques before revenue. The second is long-tenure capital aligned with hardware and science cycles. The third is the follow-on depth Indian founders often had to seek abroad.”
That said, IVCA's August report had noted how “genuinely promising startups” between TRL 1-3 struggle. The report identified it as a Valley of Death, as these startups are stuck between “too early” for commercial capital and too late for public grants.
