India's DoT seeks to help startups get VC funding

India's Department of Telecommunications (DoT) is trying to ease the funding pains of Indian startups by playing the role of a mediator between them and venture capital (VC) investors, according to media reports.

Around 25 startups using different technologies, such as the Internet of Things (IoT), quantum communications, cyber security and 5G-enabled drones, have reportedly pitched to 13 VCs through DoT. QPIAI India, Webyfy IoT and Menthosa Solutions have, for example, pitched their products and solutions to VCs from India, the UK and Uganda.

India boasts the third-largest base of tech startups globally. According to the Telecom Standards Development Society of India (TSDSI), around 95% of them are focused on software and only around 5% are deep tech startups. These are active in high-engineering areas and work with upcoming technologies to solve real-world problems. Deep tech startups in particular are said to be struggling with securing funds.

Typically, software-based startups have a shorter return on investments (ROI), making it easier for them to get funding. On the other hand, deep-tech startups not only require more funding to develop a product but also take a long time to break even.

Supporting startups

Additionally, India lacks the ecosystem for deep tech startups, which means they end up importing components, thus increasing the overall cost. They also require expensive testing and certification gear which is usually not available in the country.

As India looks to grow its profile as a tech innovator, it is imperative that it promotes innovation in the startup space. The country is realizing this and is taking a number of steps to address the gaps in the startup space. It has also set up the Telecom Technology Development Fund (TTDF) as part of the Universal Services Obligation Fund (USOF) to help telecom and technology startups. 

Previously, in a first-of-its-kind step, the DoT had given funding to several startups to promote them. The DoT had also set up a 5G testbed for the startups to test their solutions. Additionally, it has allowed startups to use government-owned labs, such as the Center for Development of Telematics (C-DOT), to test their gear and solutions. C-DoT is funding startups, as well. 

The timing of this initiative is crucial as India is keen to play a more active role in the global digital ecosystem. It has set a target of achieving a 20% market share in global mobile telecom technology manufacturing by 2047, the centenary year of Indian independence. It also hopes to have at least one telecom manufacturing company in the top five global optical and network technology firms. Startups are a crucial part of India's vision of becoming a developed nation by 2047.