India has been at the forefront of research and innovation in the space sector for decades. From Dr Vikram Sarabhai leading the Indian space programme in the 1960s and the eventual establishment of the Indian Space Research Organisation (ISRO) to India today gearing up for the fourth and fifth iterations of its Chandrayaan mission, the country has come a long way.

In recent times, one of the biggest shifts in the space industry was the government’s decision to open up the sector to private entities, thereby enabling spacetech startups to flourish. To facilitate private sector participation, the Centre established the Indian National Space Promotion and Authorisation Centre (IN-SPACe). The Indian Space Policy 2023 gave further momentum to the spacetech sector. 

ISRO has also played a key role in the rise of startups in the space sector. The infrastructure built by the space agency over the decades is benefitting a number of spacetech startups. Besides, at least two startups manufactured some of the components that were used in the Chandrayaan-3 spacecraft last year, fostering a collaborative environment for startups, industry and ISRO to work together. 

As per Inc42, India is currently home to over 150 spacetech startups, including Pixxel, Agnikul, Skyroot, GalaxEye, and Satsure, among others. Besides the government initiatives, the active involvement of venture capitalists has also helped the country build a robust spacetech ecosystem.

Indian spacetech startups raised over $285 Mn in funding between 2014 and 2023, as VC firms began taking risky bets and providing long-term patient capital. The spacetech sector is seeing a $77 Bn+ opportunity by 2030.

As India celebrates the first-ever National Space Day today on August 23, marking the success of the Chandrayaan-3 mission, Inc42 spoke to Hemant Mohapatra, partner at Lightspeed India, one of the leading deeptech investors in the country, to understand India’s space story from an investors’ lens. 

Lightspeed is one of the investors in Bengaluru-based Pixxel, which is building hyperspectral imaging satellites to solve different use cases with its satellite data. 

In the interview, as part of Inc42’s ongoing Moneyball Series, Mohapatra shared his views on Lightspeed’s thesis, the reasons behind the recent growth in the spacetech ecosystem, the way ahead for the sector, the importance of support from VCs and government to founders and businesses in the sector, and more.

Here are the edited excerpts.

Inc42: As one of the top VCs investing in deeptech in India, how do you look at the impressive growth in the country’s spacetech ecosystem in recent years? 

Hemant Mohapatra: Let’s first zoom out a bit. Every 20-30 years, a trend line matures and then a new trend line begins. As a trend line matures, you see several companies building solutions to solve similar-looking problems. This has happened in the past, and will happen again. We’ve seen this in SaaS and AI. 

This leads to making differentiation on day one harder, while, over time, building new companies to solve the same problem becomes easier. Hence, the available revenue or TAM (total addressable market) gets fragmented across multiple companies. That is when the capital market starts moving towards net new, hard-to-build, fundamental innovation-led companies.

The space sector is in the limelight because the focus now is on building and backing highly innovative, world-changing, difficult-to-build long-term businesses. 

We are seeing this across defence tech, advanced drones, climate tech such as green hydrogen, and semiconductors because they are hard to build. If you can build it, you are automatically in an advantageous position in terms of timing as well as differentiation and positioning in the market.

Our portfolio startup Pixxel and broadly the spacetech sector also come in this category.

Spacetech wasn’t getting as much funding 7-8 years ago. But since all the other markets where venture capital has gone have become more mature now, people are diversifying into this hard-to-build category a lot more.

Inc42: What is Lightspeed’s investment thesis for this sector?

Hemant Mohapatra: Lightspeed’s thesis has been very clear, we are looking for businesses that have a unique advantage to service a global demand. The second thing is that it has to be repeatable revenue of some kind.

So, if a company builds once, it sells once. If it has to build again to keep selling, it is not a repeatable model.

Building and sending satellites in space that take earth imaging data for years, as long as they stay in orbit, is a repeatable model. In this case, the companies can keep selling the same specific data. Telecom is another repeatable model. We can send a satellite in space and it will provide telecommunications, 3G, 4G from space. 

So far, we have chosen to make investments from the India fund, primarily in the global and repeatable businesses. This is where Pixxel came in. 

Inc42: Besides your portfolio startups, are you seeing any other major innovations in the space sector? 

Hemant Mohapatra: There is a lot of stuff happening. Companies are trying to build satellite manufacturing businesses. In fact, Pixxel is one of the companies that is also manufacturing satellites for themselves and the Indian government. So, manufacturing is a space we are spending more time on.

Besides, now that there are so many assets in space, there are companies that monitor and take care of those assets, either in space or from the ground. We are seeing a lot of those companies coming up.

There are examples like Skyroot and Agnikul who are building repeatable rocket models. Then some companies are doing telecom from space. So, we see a number of companies doing a gamut of things here, primarily because the talent exists.

There’s a lot of talent both from the engineering institutions as well as senior talent from ISRO to provide advisory services and also join these companies. Without the talent, this would be hard to build here.

Inc42: Are you also looking to invest in other spacetech startups?

Hemant Mohapatra: We are actively looking at many companies here. We have not made an investment yet but that doesn’t mean we are not interested.

A lot of factors come into the picture when investing, like technology and engineering risk, price, fundraise size, and so on. But we are in touch with a majority of the space companies in the country.

Our target is to find world-class founders building world-class technologies to service the world.

Inc42: How is India’s spacetech ecosystem in comparison to competitors like the US, China, or Russia?

Hemant Mohapatra: This is one of the few areas where we have a very inherent advantage. Thanks to the US, which put sanctions on India, we got sovereign capabilities in the space sector. I think the nuclear and the space programmes in India benefited a lot from the US not supporting these programmes.

As a result of the sanctions, we built indigenous technologies. Yes, we made mistakes and technologies were probably costly. But now we have the talent and wherewithal. We are one of the very few nations in the world that can actually send things to space, Mars, moon, and at a very low cost.

India always gets to hear this a lot – this is a jugaad innovation. I don’t believe that is the right way to go for our country. World-beating innovations at lower cost are fantastic. Lower cost always means higher distribution, more satellites in space, more technology innovation, and more viability of them getting to commercial scale. 

So, India has a fairly vibrant ecosystem today and the government support has been surprisingly high.

Inc42: What are the next big opportunities and the scope for improvements for the country’s spacetech industry?

Hemant Mohapatra: I think we need a lot more world-class Indian talent coming in from everywhere. It is happening in AI and it happened in enterprise SaaS and consumer tech. Now, space is ready for this. Capital is available for the best teams with the best ideas here. Bridging all the existing talent gaps in the sector is the need of the hour now.

Besides, government support needs to be continually strong –  in terms of trusting the startup ecosystem to build parts of the national space programme as well as providing the advice and the necessary commercial contracts to help startups scale both within the country and then globally.

The third is, obviously, capital. These companies need a lot of capital. Deeptech, globally, takes many years longer to find product-market fit and then many more years to find scale. But when the business works out, it produces phenomenal results. So, there has to be more patient capital and experienced investors to back them.

Inc42: Can boosting the allied sectors like semiconductors also enable the space industry to grow further?

Hemant Mohapatra: Absolutely, it will be a pretty massive needle mover because the space ecosystem supply chain is very fragmented.  

I don’t know how much of this we can bring back to India and support from India alone, but the more we can, the better it would be. During the Covid-19, Pixxel had to delay launches several times because some chip from some country got stuck midway due to import regulations.

Inc42: How is the global market viewing India’s spacetech industry?

Hemant Mohapatra: We are at a stage where our technology is being proven across all categories, including telecom, earth imaging rockets, manufacturing of satellites, and so on. The next couple of years will be a lot more focussed on just proving that we can build world-class technology at world-class prices.

When there is real momentum on the commercialisation side, we will see a broader adoption of India’s space output than today.

I would like to emphasise that a lot of countries would look at India as their supplier of choice for semiconductors, spacetech, defence tech. For the first few years, this would probably be the ASEAN nations that trust India. It would be followed by friendly Western nations, and then many more countries over a period of time.

Right now, the relationship is more trust and respect-based. Over time, it will be purely commercial – If you can provide it to me, I’ll buy it from you. 

Our goal should be to get to that point where we are absolutely nailing all the trust-based relationships and become the supplier vendor of choice for technology across these 3-4 domains.