On October 25, the Union Cabinet approved the Rs 1,000 crore VC fund to support the space sector.
The recently launched Rs 1,000 crore venture capital (VC) fund focused on startups in space sector is not a grant but the government will have equity in the startups concerned with a plan to exit, Pawan Goenka, chairman of the Indian National Space Promotion and Authorisation Centre (IN-SPACe) said on Wednesday.
IN-SPACe is an independent nodal agency under the department of space to promote and oversee private sector involvement in space activities. The organisation will be managing the Rs 1,000 crore VC fund alongwith appointed fund managers, who will scrutinise the applications by startups in pre-series funding stage.
“The fund will work like any other VC fund. The only difference is that there is no other fund that is focused on funding space startups,” Goenka said, adding that the plan is to stay invested for 12 years, which is a normal VC cycle.
“The fund managers will go through the complete due diligence, they will go through the business skill, they will go through the commercial payback. It is not a giveaway and startups will have to qualify for it,” Goenka added.
The government, however, is not looking at higher returns from the investments in a bid to support the startups and justify the investments. IN-SPACe expects the fund to be fully operational by April-June quarter of FY26.
The VC fund aims to support around 40 startups. Ticket size for investments will range from Rs 10 crore to Rs 60 crore, depending on a startup’s development trajectory and long-term potential.
The annual investment range is projected to be between Rs150 crore and Rs 250 crore, depending on the industry’s needs and growth opportunities.
“We will have a fund manager, which we are going through the process of selecting. There will be an advisory committee, an investment committee, and a trustee. There will be certain fees that will be paid to the investment manager,” Goenka said, adding that government is entitled to ask for a board seat if its holding in any startup crosses 10% but it is not a pre-requisite.
On October 25, the Union Cabinet approved the Rs 1,000 crore VC fund to support the space sector. This comes amid reluctance from VCs to invest in the space startups being a risky and high capital intensive bet.
Support to the private space sector also aligns with the government’s goal of enabling Indian companies to develop unique space-based solutions in a bid to reduce dependency on foreign technology and allow for stronger competition on a global scale.
“We want to do primary investment, we want to help the companies to get money and not buying stake of previous investors in startups who are looking to exit,” Goenka said, adding that he sees the government exiting in favour of either a private equity firm or if there’s an initial public offering (IPO).
Currently, there are 250 startups operating across various segments in the space economy in India.
According to Goenka, in the last 2-2.5 years, a total of $300 million investments have gone into these startups.
On the Space law, Goenka said, IN-SPACe has created a final draft, for which the consultations are expected to start in the January-March quarter.
At present, the Indian space economy is valued at approximately $8.4 billion, constituting a 2% share of the global space market. The government is looking to scale the space economy to $44 billion by 2033, including $11 billion in exports amounting to 7-8% of the global share.