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Deeptech investments are notorious for having long investment cycles. They can take anywhere between 7–12 years from founding to a liquidity event given the intensive R&D and testing phases. This requires specialised patient capital—something not many funds are willing to dabble in. Fundamentum Frontier Advisors (F2A), the investment platform led by Ashish Kumar and anchored by Infosys co-founder Nandan Nilekani, is not among them. It recently secured ₹3,000 crore in subscriptions for its growth-stage AI and deeptech fund. Its limited partners have approved increasing the fund’s hard cap to ₹3,500 crore, following demand beyond its available capacity. The fund plans to deploy capital over the next two to three years. It expects to invest in 12–15 companies, with individual cheques of ₹100 crore to ₹200 crore, according to F2A’s announcement. Kumar believes the investor interest reflects growing recognition that Indian AI and deep-tech businesses may follow a different path from companies in Western markets. “The reason is people have bought the story; people have realised that the Indian AI and deeptech companies will not necessarily look exactly similar to what is happening in the West,” he tells AIM. He points to India’s own supply chains and the opportunity to develop companies around local requirements. Kumar also sees a gap in the market for investors willing to back deeptech businesses at the growth stage, when they need substantial capital to expand. Where F2A Plans to Invest F2A plans to allocate around 40% of its investments to physical AI, including semiconductors, advanced materials, robotics, and space technology. Another 40% will go to digital consumer companies using AI, while the remaining 20% will target enterprise tools, including frontier models, databases, and analytics. Kumar describes physical AI as a combination of hardware and software, rather than a category limited to hardware manufacturers. He adds that the software component could take different forms, including models running on a platform or systems designed to improve data storage and memory utilisation. F2A is also looking at companies that could help India build capabilities in strategically important sectors. Kumar identifies communications, security, financial services, healthcare, and food systems as areas where domestic technology businesses could have a role. He acknowledges that complete supply-chain independence is not realistic for any country. The aim is to begin building capabilities in areas where local technology can reduce dependence on overseas suppliers. Three Investments, in Three Months F2A has identified three companies in which it expects to close investments over the next three months. Two are in deeptech infrastructure, while the third operates in enterprise AI. The fund has identified opportunities involving an edge AI platform and an inference layer designed for a specific use case. The companies have not been named. Kumar identifies supply-chain localisation and the commercial use of AI as common themes across the companies F2A is evaluating. “All companies are wanting to localise a larger part of their supply chain, and not necessarily be dependent on only the overseas or the foreign company,” he says. Kumar also said businesses are using AI to improve their financial performance. “AI, as a technology, has a new capability, and people are able to use that capability to create some offering in their companies, either to increase their revenues or decrease their costs. Usually both.” The focus on customer outcomes gives F2A a way to assess whether a technology business has a commercial use case beyond its technical capabilities. Why Domestic Investors are Interested F2A’s investor base includes Indian corporations, family offices, and financial institutions. Kumar links their interest to the possibility of backing companies with proprietary technology, no barriers to entry, and strong growth prospects. He believes that while deeptech companies can take longer to generate their initial revenue, they may become profitable sooner once revenue starts coming in. That is Kumar’s assessment of the investment opportunity, rather than a guaranteed outcome for the sector. Nilekani’s involvement also helps F2A evaluate where India may need to develop or invest in AI infrastructure, Kumar says. He pointed to Nilekani’s understanding of technology, business, and policy as useful in identifying areas worth exploring before the team conducts due diligence on individual companies. F2A’s expanded hard cap gives it additional capacity to pursue its investment strategy. The next step will be deploying the capital into companies that can turn technical capabilities into scalable businesses, particularly in areas where customers are seeking alternatives to overseas technology providers.
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