Indian Space Success Sparks Debate Over Venture Capital Risk Aversion

A Gap Between Innovation and Investment

In July 2026, Skyroot Aerospace launched the Vikram-1 rocket, marking the first time a privately developed Indian vehicle successfully reached orbit. The event signaled a shift in India’s space industry, which has long been dominated by the state-run Indian Space Research Organisation (ISRO). However, the celebration of this engineering feat has been followed by a stark critique of the country’s venture capital ecosystem.

Journalist Ashlee Vance, known for reporting on the global space industry, visited India in October to examine the nation’s emerging hardware economy. After meeting with 15 companies, Vance questioned why Indian venture capitalists (VCs) appeared reluctant to finance high-risk, high-reward technologies. He suggested that, compared to global markets, local investors maintain a poor reputation among startup founders.

Founders Challenge Investment Practices

The critique has ignited a debate within the Indian tech sector. Founders argue that local investors often demand immediate commercial traction for unproven technologies, engage in lengthy due diligence processes, and place excessive weight on a founder’s pedigree rather than the innovation itself.

Akash Kulgod, founder of Dognosis, which specializes in canine-assisted cancer detection, highlighted these frustrations. After engaging with approximately 80 investors, Kulgod noted that roughly 65% of his interactions were with US-based firms. He stated that US investors typically provided swift decisions, whether approving or rejecting an opportunity. By contrast, he alleged that some Indian investors prolonged discussions through repeated meetings only to eventually demand commercial validation that the startup had not yet achieved.

Investors have defended their positions by pointing to India’s growing list of deeptech successes and the increasing availability of specialized capital. They also cited the structural challenges inherent in financing scientific innovation within the region.