Why IIT Madras is Shunning the YC Model for its ₹1,000 Cr Deeptech Fund

IIT Madras Director V Kamakoti wants Indian companies to start buying from homegrown deeptech startups.

“Just give a ₹10 lakh order,” he quips during IIT Madras’ annual alumni conference, suggesting that companies could identify 10 startups and give each a small purchase order rather than waiting for them to compete directly with established global players.

The confidence comes as access to capital is no longer the biggest challenge facing the sector. According to the IVCA Bharat DeepTech Report 2026, the deeptech sector has secured $11.4 billion in cumulative funding between 2015 and mid-2026, with nearly $3 billion raised in 2025 alone.

Kamakoti says government support for deeptech startups has improved, with policies such as the National Deep Tech Startup Policy and a ₹1 lakh crore Research, Development and Innovation Scheme to scale sovereign capabilities in sunrise technologies.

The gap, he argues, is private-sector adoption. He calls on the automotive, advanced manufacturing, camera, mobile phone, and other industries to start sourcing technology from Indian startups.

“You solve a problem for India, you solve for the entire world,” he says, pointing to the diversity of conditions and requirements Indian companies must address.

IIT Madras Deeptech Ecosystem 

The push comes as IIT Madras, IIT Madras Research Park, and Unicorn India Ventures recently raised ₹450 crore in the first close of their ₹1,000-crore IITM Unicorn Frontier Fund-I for early-stage deeptech startups.

The fund reached its first close within three months of receiving approval from the Securities and Exchange Board of India (SEBI). It is expected to reach its final close by December 2026, with a ₹400 crore greenshoe option, taking its potential corpus to ₹1,000 crore.

The fund is managed by Unicorn India Ventures, which was selected after around 30 fund managers expressed interest.

It has already deployed nearly ₹55 crore across four startups—space tech venture Hathor, quantum-focused Quanstra, Li-ion battery maker Triolt Energy, and Carbelim, which is working on carbon capture technology. 

The funding is not limited to IIT Madras startups. Kamakoti says any startup registered in India should have an opportunity to compete for funding through the initiative.

The fund plans to build a portfolio of 25 startups, with an average investment of ₹15–25 crore per company. Most investments will focus on early-stage deeptech startups at Technology Readiness Levels (TRL) 3–4, which represents the mid-to-early stages of product development, including proof-of-concept and prototypes.

Bhaskar Majumdar, Founder and Managing Partner at Unicorn India Ventures, says the fund will invest for at least 10 years, with the option to extend it by another two years. The longer timeline reflects the time deeptech startups need to develop their technology and scale their businesses.

Not Another Y Combinator

Kamakoti says the fund is taking a longer-term approach than conventional startup investment platforms, including Y Combinator.

The fund will also reserve capital for follow-on investments rather than deploying most of its capital in the initial round.

The fund is focused on building companies rather than seeking quick returns. Kamakoti adds the fund brought in investors who understood the longer cycle of building and scaling deeptech companies.

He compares the approach with what he called the difference between a ‘rabbit fund’ and an ‘elephant fund’. 

Selection Process 

Nat Malupillai, Group CEO of IIT Madras Research Park (IITMRP), says the startup selection process centres on deep technology and whether it addresses a meaningful problem.

“These technologies should be in the service of the nation. That’s all part of the selection criteria,” he says.

The founders are another major consideration. “We really want to go beyond one founder. Being an entrepreneur is a very lonely job, so we really encourage them to be a team of founders,” Malupillai says.

Technical capability alone, however, is not enough. IIT Madras Research Park also looks at whether startups have built prototypes, acquired initial customers, monetised their products, and demonstrated an understanding of the market.

From Prototypes to Startups

IIT Madras incubated 102 companies in the financial year before the last and 109 companies in FY26.

Kamakoti says the institute is targeting the incubation of at least 100 companies every year.

IIT Madras currently has 583 startups in its ecosystem, with a combined valuation of around ₹83,000 crore, according to Kamakoti.

The institute expects the number to reach 1,000 startups by 2032.

”We must have one IPO per month,” he says, adding that financial success can help create a sustainable cycle for education and entrepreneurship.

Kamakoti points to Ather Energy as an example of the returns that long-term startup investments can generate for IIT Madras. The institute invested roughly ₹15 lakh in the company more than a decade ago, and its stake is now worth about ₹229 crore, according to Kamakoti. 

Ather, founded by IIT Madras alumni Tarun Mehta and Swapnil Jain, became the first IPO-listed company from the IIT Madras Incubation Cell portfolio in May 2025.

Today, Kamakoti says the relationship between IIT Madras and industry has also changed considerably. Companies are setting up R&D centres at the Research Park and working with IIT Madras faculty, students, and startups through the ecosystem. Saint-Gobain, for instance, has operated its R&D centre at IIT Madras Research Park since 2016.