Deeptech fund faces transparency questions after first allocation

The Indian government's Rs 1 lakh crore Research, Development and Innovation (RDI) fund for deeptech startups is facing questions over its first allocation. Inc42 reports that 15 of 22 companies that received Rs 2,192 crore in the first round had investment links with seven of the 12-member investment committee. These 15 companies, including Tejas Networks, Ather Energy, and Agnikul Cosmos, accounted for Rs 1,377 crore, or roughly 62% of the approved amount.

The government has stated that conflicted members disclosed their interests and had zero involvement in evaluating or sanctioning the relevant proposals. Committee members say they recused themselves where required. However, deeptech investors and fund managers are questioning whether prior disclosure and recusal are enough when industry participants allocate public capital.

Founders also allege the application process was not widely communicated, and the first-come, first-served policy may have favoured startups already connected to the ecosystem. Emerging fund managers raised concerns that the fund's fund-of-funds scheme appeared to favour experienced managers. Stakeholders say future allocations must demonstrate transparency and support emerging managers and early-stage ventures.