India’s Space Techs Don’t Get Enough Investments

India's space aspirations are on the rise, but a comparison between AI and space tech funding shows a mismatch with its strengths
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India’s space ambitions are soaring to new heights, yet, a direct contrast between AI and space tech funding indicates that the country is not playing to its strengths. In 2022, startup funding in the sector grew from $67.2 million in 2021 to $108.52 million—which is set to go up to $300 million in 2023. In contrast, AI startup investments reached $3.24 billion in 2022. 

However, there are a few players actively investing in India’s space vision. One entity at the forefront of these investments is Speciale Invest, an organisation that has been fostering the growth of space tech startups in India since its inception in 2017. It is the company behind space tech startups like Agnikul Cosmos, Astrogate Labs, Kawa Space, GalaxEye and Inspecity.

In an exclusive interview with AIM, Vishesh Rajaram, managing partner at Speciale Invest spoke about the company’s investment, alongside India’s burgeoning space tech ecosystem at large and more. 

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Cultivating a Frontier of Innovation

Speciale Invest’s journey in space technology investment began in 2017, with an eye on the burgeoning landscape of advanced science and technology ventures. The organisation embarked on a mission to cultivate a culture of innovation in the country, capitalising on India’s deep-rooted expertise in science and technology. 

“ISRO is such a powerful and highly qualified department of science agency in the country that we felt that with their help, you could spin an entire industry in this country. Additionally, right around Covid, the space policy came out, and was on the same line, suggesting that ISRO has strong competency and it should help expand India’s market share [in space-tech], which I think was 2%,” said Rajaram, adding that the growth will be led by ISRO, IN-SPACe and the department of science and technology.

“We’ve got a reasonable 15-20% of our investment in the sector. It’s only going to get better,” he said. Speciale Invest believes that its role was not just to invest capital, but also facilitate the growth of startups driving technological advancements in the sector.

Rajaram said that the landscape was shaped by several trends, including the privatisation of the space sector globally, with companies like SpaceX and Amazon leading the way. He said that his firm identified a ripe opportunity for growth in India, as the country witnessed an increase in the number of satellites launched into space, alongside a reduction in the size and cost of these satellites and startups.

Investing in Innovation

The organisation made strategic investments in companies that demonstrated unique offerings in the space-tech sector. A notable investment was in the company called Agnikul Cosmos, marking their foray into the sector. Cosmos was positioned to capitalise on the trends of satellite privatisation and accessibility, aligning with the organisation’s forward-looking approach.

Their investment portfolio expanded to encompass a range of cutting-edge technologies and services. One of their investments was in a company named India, which boasts a constellation of satellites with multiple sensors, offering unique capabilities within the country. Another investment was in Astrogate Labs, a company specialising in optical communication terminals for satellites. Kawa Space, yet another investee, focused on geo-data intelligence from the ground.

Challenges and Opportunities

While the growth potential of India’s space tech sector is immense, it’s not without challenges. Rajaram, acknowledged that the sector is highly engineering-intensive, requiring specialised expertise. Founders and teams need to navigate complex technical and regulatory landscapes. However, the organisation sees this challenge as an opportunity to foster a deep pool of talent at the intersection of academia and industry.

He said that it is indeed a challenging space, but ISRO stands as a solid backbone.

“This is a very engineering-heavy sector and not for anybody and everybody to come and start. These are the companies that will only come in from PhDs, academia, or an intersection of academia and industry,” Rajaram said.

Collaboration and Growth

Collaboration between startups, academia, and government institutions has been instrumental in nurturing India’s space tech ecosystem. The Department of Space, along with entities like IN-SPACe, has played a crucial role in providing startups with access to talent, testing facilities, and policy frameworks. This collaboration has helped startups overcome hurdles and create synergies, propelling the entire sector forward.

“The good news is that the kind of support and talent that ISRO is providing to these startups is phenomenal. A lot of ex-ISRO scientists are also available and are committing time for these startups to sort of build-up and go. This is not like running an e-commerce company, definitely,” he added.

A Vision for the Future

Looking ahead, the VC firms envision exponential growth for India’s space-tech sector. As per recent reports, there are around 140 space startups in India, each with unique propositions and capabilities. These startups are expected to raise substantial capital, both from venture capitalists and government-supported projects. The sector’s potential market share is predicted to increase from 2% to 8% over the coming years.

During the conversation, Rajaram cited a report by Arthur D Little which highlights the shift in the global space sector towards more private sector involvement. India is also experiencing this change and could grow its $8 billion space economy to $100 billion by 2040, he said. 

ADL labels this phase Space 4.0, evolving from early astronomy to collaboration. India’s space market grows at 4.3% CAGR, exceeding the global 2.2%. Its economy could hit $40 billion by 2040, but the report suggests aiming for $100 billion. The proposed growth areas include satellite-based internet, leading launch services, space mining, and manufacturing. Success could double India’s space GDP contribution to 0.5% and create 3 million jobs.

While India’s global space economy share is 2%, it could reach 4% at 9.2% CAGR (2022-2040). Government investment and private sector involvement will drive this, meeting launch and satellite service demands. The report, in line with Rajaram’s opinion, indicates at growing domestic space startups via ISRO and INSPACe show private sector interest. Yet, the report hints at funding and technology challenges. Here, a revised FDI policy is urged and as China’s space activity exceeds India’s, global relationships and strategic shifts are needed for India to compete.

Nonetheless, there are some positive indicators. Google recently made its inaugural investment in India’s space-tech in June. The $36 million Series B funding round was led by Google in Pixxel, a Bengaluru-based startup. Indian billionaire Anand Mahindra has also backed Agnikul Cosmos. 

In September 2022, Skyroot Aerospace secured a significant funding milestone in the space technology sector. The company successfully raised $50.5 million in its Series B funding round, which was spearheaded by Singapore’s GIC.

India’s journey into space tech represents a convergence of technological prowess, innovative thinking, and strategic investments. As India continues to advance its space ambitions, the foundations laid by organisations like Speciale Invest will play a pivotal role in shaping the future of the country’s space-tech ecosystem. With a focus on innovation, expertise, and collaborative growth, India is poised to make a mark on the global stage of space technology.

Shyam Nandan Upadhyay
Shyam is a tech journalist with expertise in policy and politics, and exhibits a fervent interest in scrutinising the convergence of AI and analytics in society. In his leisure time, he indulges in anime binges and mountain hikes.

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