The L&T Innovation Fund, the corporate venture capital arm of Larsen & Toubro, is making a strategic shift toward India's deeptech startup ecosystem after primarily focusing on international investments. According to Sushma Kaushik, head of L&T Innovation Fund, as reported by Mint, the fund has begun setting up groundwork to become more comfortable with the Indian tech ecosystem. This pivot comes as investor appetite for Indian deeptech has strengthened amid government efforts to promote indigenous technologies in areas such as space, quantum computing, defence, and telecom. The move aligns with India's evolving industrial landscape, courtesy the government's push to local manufacturing across sectors, with deeptech sectors being backed by initiatives such as Production Linked Incentives and India Semiconductor Mission.
Investments in India's deeptech sector have experienced remarkable growth, with funding reaching $2 billion across 179 deals in 2026 compared to $901 million across 468 deals in 2023, according to startup intelligence platform Tracxn. While the total number of deals has decreased, the average investment size has increased significantly, indicating that investors are making fewer but larger bets on high-conviction opportunities. The five-year-old fund has made eight investments globally, including AI-driven cybersecurity company Cyfirma and a company building digital twins for water treatment plants. Dassault Systemes is also aggressively moving toward tapping into India's deeptech boom, with the company's India clientele including names such as The ePlane Company, River Mobility, and L&T Energy Hydrocarbon.
Unlike its overseas investments, which have targeted companies at technology readiness levels (TRLs) 7 or 8, the fund plans to back Indian startups earlier, at TRLs 4 or 5. As reported by Mint, Kaushik explained that if a company is at TRL 4 or 5, the fund wants to help take them to 7 or 8. The fund typically writes first cheques of $1-10 million and keeps its stake below 20%. Beyond capital, the fund provides support in partnerships, empanelments, customer engagements, and go-to-market efforts. Dassault Systemes operates differently, emphasizing enablement and support rather than taking stakes, with initiatives including free software licenses, mentorship, and educational programs like Aaktriti and hackathons. As Shree Harsha noted, "Unlike other players who take a stake in startups while providing help… we don't do it. Our pure play is only in a manner of enablement and support."
The fund's investment thesis spans AI, industry 4.0, green energy transition, and industrial electronics, all fitting within L&T's core business lines including engineering, procurement and construction projects, energy, semiconductors, data centres and hydrogen. Within AI, the fund focuses on both physical applications like drones and robotics, as well as software including physical AI data collection. Dassault's strategy focuses on an "Invest in India for India" mantra, helping customers leverage AI companions and exploring new segments such as semiconductors and data centers. Kaushik highlighted energy storage as another priority, noting that 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 company is also working with hundreds of Indian startups, with support including limited time free licenses, mentorship, and tech development.
Despite India's deeptech potential, domestic corporate venture capital activity still lags global peers, with international CVCs like Bertelsmann India Investments, TDK Ventures, and Qualcomm Ventures being more active in the country. According to Kaushik, as reported by Mint, Indian corporates are approaching the ecosystem carefully, still trying to figure out how to integrate investments into their own business operations. However, the Indian market is undergoing a key shift wherein new-age founders are emerging across industries, as noted by Shree Harsha. Dassault's initiatives align with India's USD 1 trillion manufacturing ambition, focusing on high-end R&D investment, data sovereignty, cloud-based Industrial AI tools, and new products from emerging deeptech companies. The company has made a massive investment of Euro 100 million in expanding its R&D base in Pune, with plans to double its current workforce of 6,500 employees in the next three to four years.
