Fund plans to invest earlier at TRL 4-5, backing engineering-led founders building IP-driven businesses, as India deeptech funding hits $2B in 2026.
Alpha Score of 51 reflects moderate overall profile with weak momentum, moderate value, moderate quality, moderate sentiment.
The L&T Innovation Fund, the corporate venture capital arm of Larsen & Toubro, is turning its attention to Indian deeptech startups after spending most of its first five years investing abroad. Sushma Kaushik, who heads the fund, said the team has begun setting up the groundwork to get comfortable with the domestic tech ecosystem.
Kaushik spoke on the sidelines of L&T's Manthan event, where the conglomerate showcased technologies from 21 drone startups across defence, infrastructure, logistics and public services. The fund's interest in Indian deeptech comes as investor appetite for the sector has strengthened. Government efforts to promote indigenous technologies in space, quantum computing, defence and telecom are part of the backdrop.
India deeptech funding has grown sharply since 2023, when total investment stood at $901 million across 468 deals, according to startup intelligence platform Tracxn. In 2026, funding has already hit $2 billion across 179 deals. The data suggests investors are writing fewer but larger cheques, concentrating capital on high-conviction bets.
The five-year-old fund has made eight investments globally. Its portfolio includes AI-driven cybersecurity company Cyfirma and a company building digital twins for water treatment plants. Kaushik declined to name the other holdings but said they largely operate in industrial AI. The fund typically writes first cheques of $1 million to $10 million and keeps its stake below 20%.
For overseas investments, the fund has targeted companies at technology readiness levels 7 or 8. For Indian startups, it plans to invest earlier, at TRLs 4 or 5. “If a company is at TRL 4 or 5, we want to help take them to 7 or 8,” Kaushik said. Besides capital, the fund offers support with partnerships, empanelments, customer engagements and go-to-market efforts.
Kaushik said India's appeal lies in the emergence of engineering-led founders building IP-driven businesses alongside improving access to capital. Domestic corporate venture capital activity still lags global peers. Global CVCs like Bertelsmann India Investments, TDK Ventures and Qualcomm Ventures have been more active in the country than their local counterparts. According to Kaushik, the gap has more to do with finding synergies than an unwillingness to invest. “Indian corporates are dabbling a little carefully in this ecosystem. When I talk to my other colleagues in the CVC ecosystem, they are still trying to figure out how to integrate any kind of an investment into their own business.”
L&T's CVC arm looks at areas including AI, industry 4.0, green energy transition and industrial electronics. All these sectors fit into the conglomerate's larger core business lines spanning engineering, procurement and construction projects, energy, semiconductors, data centres and hydrogen. Within AI, Kaushik said they look at both physical hardware like drones and robotics as well as software, including physical AI data collection. “We feel that to make any hardware intelligent, you need AI to be both physical and software.”
Energy storage is another priority. Kaushik said rapid growth in AI infrastructure and data centres will sharply increase electricity demand, creating opportunities in deep transformer technology products, battery storage, grid technologies and power equipment. The same data centre buildout is also straining India's power grid, as explored in a recent report on the power grid lagging behind India's $250 billion data centre push.
Drafted by a large language model from the source reporting linked above, then screened by automated publishing checks. It is not read by a journalist before publication. Some articles cite our Alpha Score. Verify prices and figures against the original source. Educational coverage, not personalized advice.