Shastra VC Raises $100 Million to Back AI, Deeptech and Defence Startups in India

Bengaluru’s Shastra VC has officially raised its third fund — a $100 million (₹963 crore) vehicle aimed squarely at India’s most technically demanding frontier: artificial intelligence, climate technology, space systems, and defence. For a country building serious depth in deeptech, the timing couldn’t be sharper.

What the $100 Million Fund Targets — Sectors, Ticket Size and Stage

Shastra VC’s new $100 million fund will write cheques between $500,000 and $3 million, backing intellectual property-led startups from seed stage through Series A and beyond. Investment focus covers four high-conviction sectors — AI, renewable sciences, space and defence technology — reflecting a deliberate bet on India’s capacity to produce globally competitive, IP-moat businesses rather than consumer internet clones.

India’s startup funding story in 2026 isn’t limited to deeptech alone. Lightfury Games’ $11 million raise — backed by cricket icons Dhoni, Bumrah and Pandya — shows how diverse and investor-ready India’s startup ecosystem has become across verticals.

The Team — Operators Who’ve Built and Sold Companies

Shastra VC was founded in 2022 by Vasant Rao, Avijeet Alagathi, and Ashis Nayak, all former operators with real exits behind them. Rao and Nayak co-founded Autoninja, which was acquired by ICICI Lombard. Alagathi founded BYG, a startup that entered an acquisition arrangement with Curefit. The firm was previously known as Veda VC before rebranding as Shastra VC — signalling a sharper sectoral identity around deep science and national technology priorities.

Portfolio Track Record and Follow-On Performance

Shastra VC has deployed over $50 million across its first two funds, invested in more than 30 startups, and helped portfolio companies raise upward of $80 million in follow-on capital — a strong signal of portfolio quality. Backed companies include Alt Carbon (carbon removal), Simplismart (AI inference), Sisir Radar (defence tech), Avammune (biotech), and Sanlayan (advanced materials). These aren’t pivot-happy SaaS plays. They’re hard-science bets with long runways and high barriers to entry.

The fund’s follow-on track record reflects a broader confidence in Indian deeptech. Across consumer and B2B alike, Sahi’s $33 million Series B — led by Accel and Elevation — is another signal that institutional capital is flowing decisively into India’s next tier of startups.

Advisory Network — Credibility by Design

Shastra VC’s advisory bench adds another layer of institutional credibility. The firm counts former Tech Mahindra CEO CP Gurnani and former Kotak Mahindra Bank executive C Jayaram among its advisors, alongside specialists spanning biotech, semiconductors, climate and space. For founders building in regulated or government-adjacent industries — defence, spacetech, nuclear — that kind of network isn’t just prestige. It opens doors that capital alone cannot.

India’s Deeptech Funding Wave — Why 2026 Is Different

Record Capital, Policy Tailwinds and a Growing Startup Pipeline

Shastra VC is raising this fund at an inflection point for Indian deeptech. The sector ranked third in India’s startup funding landscape in 2025 — behind only ecommerce and fintech — with approximately $500 million raised across 87 deals. In Q1 2026 alone, deeptech startups pulled in another $166 million.

Policy has played a direct role. The government extended Startup India benefits for deeptech companies to 20 years and raised the turnover eligibility threshold to ₹300 crore. It also introduced tax benefits, ESOP-related TDS deferment, and relaxed loss carry-forward norms — removing friction for R&D-heavy businesses with long capital cycles. The Budget 2026 startup and SME provisions further strengthened this direction with targeted growth fund allocations.

The Startup India Fund of Funds has been expanded to ₹10,000 crore, with deeptech named a key focus under Phase II. The ₹1 lakh crore Research, Development and Innovation (RDI) scheme and India Semiconductor Mission 2.0 further de-risk early-stage bets in hardware and applied science.

Shastra VC isn’t moving alone. Piper Serica this week launched the Bharat Tech Fund — targeting ₹600 crore with a ₹200 crore greenshoe — to back startups across semiconductors, AI, spacetech, defence and biosciences. Celesta Capital, meanwhile, is reportedly raising a ₹2,000 crore India-focused deeptech fund after receiving SEBI approval for its Category II AIF.

What This Means for Early-Stage Deeptech Founders

For founders building in AI, climate science or defence technology, Shastra VC’s $100 million raise represents more than a funding announcement. It signals sustained, specialist conviction in sectors where most generalist investors still hesitate. With cheque sizes from $500,000 to $3 million and a track record of unlocking follow-on funding, Shastra is positioned as the kind of first-institutional-money partner that IP-led startups — ones that need patient capital, not quick exits — actually need.

Stay ahead of India’s deeptech investment landscape on KnowStartup.

Author

Sachin

Sachin Sidharth is a Digital Marketing professional with a master’s degree in Digital Marketing from Coventry University, UK. He has 10+ years of blogging and online marketing experience. He currently heads Digital Acquisition for a leading London-based Fintech firm. At KnowStartup.com He focuses on writing Digital Marketing guides and manages...

Sachin Sidharth is a Digital Marketing professional with a master’s degree in Digital Marketing from Coventry University, UK. He has 10+ years of blogging and online marketing experience. He currently heads Digital Acquisition for a leading London-based Fintech firm. At KnowStartup.com He focuses on writing Digital Marketing guides and manages KnowStartup's Digital Agency rankings of firms across multiple cities in India. You can reach him on Linkedin.

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