Centre’s nod to Rs 1000-cr venture capital fund for space start-ups

New Delhi: In a bid to drive private investments in the space sector, the government on Thursday approved setting up of a Rs 1,000 crore venture capital for start-ups, a move welcomed by the industry as a game changer.

The fund will function under the aegis of Indian National Space Promotion and Authorization Centre (IN-SPACe) and will be operated along with Indian Space Research Organisation, Information and Broadcasting Minister Ashwini Vaishnaw told reporters here.

The fund, approved by the Union Cabinet at a meeting chaired by Prime Minister Narendra Modi, will invest in 30-35 space start-ups in two tranches – the first of Rs 5-10 crore followed by Rs 10-60 crore at a later stage.

“Excellent news for the space sector! The Cabinet’s decision on establishing a Venture Capital Fund dedicated to the space sector will have a phenomenal impact on the youth. It will give opportunities to several innovative minds and add momentum to our space programme,” Modi said in a post on X.

The Venture Capital Fund for space sector start-ups was announced by Finance Minister Nirmala Sitharaman in the Union Budget presented after the NDA government led by Modi assumed office for the third consecutive term.

The fund will focus on start-ups with proof of concept and commercialisation potential and is expected to drive innovation in satellite technology, launch vehicles and space applications, Vaishnaw said.

“We believe that this fund will not only be a key enabler for growth of the Indian space startup ecosystem but will also inspire investors to seriously look at this sector as an investment and come forward to become a part of the Indian space startup story,” Lt Gen A K Bhatt (retd), Director General, Indian Space Association (ISpA) told PTI.

Pixxel founder and CEO Awais Ahmed said the Rs 1,000 crore venture fund was exactly what India’s spacetech ecosystem needed right now.

“This fund could be the launchpad for the next wave of space companies tackling everything from climate monitoring to satellite communications,” Ahmed said in a post on X.

An official statement said the deployment period of the Rs 1,000 crore venture capital fund is planned to be up to five years from the actual date of start of the operations.

“The average deployment amount could be Rs 150-250 crore per year, depending on the investment opportunities and fund requirements,” it said.

The fund was proposed by IN-SPACe to support India’s space economy that is currently valued at USD 8.4 billion. And is targeted to touch USD 44 billion by 2033.

“The fund aims to address the critical need for risk capital, as traditional lenders are hesitant to finance startups in this high-tech sector,” Vaishnaw said.

The fund will be operated by a professional fund manager and the government is expected to have a multiplier effect with private fund co-investments.

The fund will comprise a trustee, fund manager, investment committee, advisory board and other structures as per SEBI guidelines for alternative investment funds.