India’s ₹7,131 cr RDI Fund backs deeptech fund managers

India’s central government-backed ₹1 lakh crore Research, Development and Innovation (RDI) Fund has approved a cohort of second-level fund managers, committing ₹7,131 crore to accelerate private investment in deeptech startups. Inc42 first reported the cohort selection on Thursday.

The selected managers, chosen from a competitive applicant pool, will raise and deploy capital under the RDI Fund’s mandate to bridge the late-seed and Series A funding gap for deeptech ventures. The ₹7,131 crore allocation is not a direct grant but a commitment to co-invest alongside private backers, with the government’s share structured to encourage broader participation.

This approach aligns with earlier efforts like the IIT Madras Unicorn Frontier Fund, which secured significant capital in its first close last month and has already made early investments across sectors such as space, quantum computing, and battery technology. Unlike those institution-led vehicles, the RDI Fund’s cohort is industry-agnostic, targeting a range of deeptech sectors.

The announcement arrives as India’s deeptech funding gap remains a persistent challenge despite strong seed-stage activity. Industry discussions, including those at recent startup events, have highlighted follow-on capital as a key bottleneck, with many startups struggling to progress beyond early rounds. The RDI Fund’s model—using government capital to catalyze private investment—aims to address this by fostering specialized fund managers with domain expertise.

Questions remain about the pace at which these managers will raise their sub-funds and whether the government’s co-investment structure will attract sufficient backing. Observers will monitor progress in the coming quarters.

Sources: inc42.com