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$119M Fund for Space Startups, Five Ways to Help Space Ambitions

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9M Fund for Space Startups, Five Ways to Help Space Ambitions

The Indian government has approved a $119 million (Rs 1,000 crore) venture capital (VC) fund to support space startups in the country. The Union Cabinet on Thursday (October 24) approved the launch of the VC fund in July. Approved the fund proposal The Cabinet said in a press release that VC The fund will be managed by space regulator and developer Indian National Space Authorization and Promotion Center (IN-SPACE).

The development of the Indian space industry has gained momentum

India is one of the five most space-capable countries in the world, but its share in the space economy is only 2 percent. The Narendra Modi government wants to change this and the venture capital fund is a step in that direction. Since 2019-20, the growth of the Indian space industry has accelerated as the government opened the sector to more private activities, liberalized investment norms, and issued space policies, regulations and guidelines.

“It will have an unprecedented impact on youth”

In a post on X (formerly Twitter), Prime Minister Narendra Modi said the fund will have an “unprecedented impact on the youth.” Modi added: “This will provide opportunities to many innovative minds and give impetus to our space programme.”

  1. 40 startups will receive support in the next five years

The Cabinet said in a statement that the Rs 1,000 crore fund will be used to support around 40 space startups over the next five years. Also, depending on the investment opportunity and fund requirements, the average investment amount can be Rs 150-250 crore per year. As far as funds disbursed in a year are concerned, a startup can expect an investment of between Rs 10 and Rs 60 crore. “The indicative range of proposed investment is Rs 10-60 crore, depending on the stage of the company, its growth trajectory and its potential impact on national space capabilities,” the Cabinet statement said after the approval. “The indicative capital investment range could be: Rs 10-30 crore for development stage and Rs 30-60 crore for late development stage.”

  1. multiplier effect

Capital investment in startups is expected to have a multiplier effect on the Indian space industry as a whole. Investment in selected startups is expected to provide additional funding for later stage development. This is expected to instil confidence among private investors. While the selected startups will work on expanding manufacturing and services, they are expected to create many indirect jobs as well as investment opportunities throughout the supply chain.

  1. Boosting India's 'self-reliance' ambitions

The fund will also boost India's ambition to become “self-reliant” in critical sectors such as space. The Cabinet said in the statement that the creation of this fund will help retain India-based space companies and curb the trend of Indian companies setting up shop abroad.

  1. Help to achieve the goal of quintupling the growth of the space sector

India's space economy is currently valued at around $8.4 billion and the Modi government wants to quintuple it to $44 billion over the next decade. The venture capital fund is expected to be an important step towards space development. However, the space sector is quite new in India, so many of the companies are startups and not traditional companies. This means that most of the growth in India's space sector will be driven by startups. Therefore, supporting startups will go a long way in developing India's space economy. There are currently around 250 space startups in India. Indian space startups are known around the world for their cost-effective manufacturing solutions and services. According to the news agency, space startups also provide services for communications, agriculture and raw materials, where high-quality data is a valuable resource.

  1. Create jobs and promote research and development

The Cabinet said in a statement that the fund will help companies expand, invest in research and development (R&D) and expand their workforce. “Each investment can create hundreds of direct jobs in sectors such as engineering, software development, data analytics and manufacturing, as well as thousands of indirect jobs in supply chains, logistics and professional services,” the cabinet said in a statement. “By fostering a strong startup ecosystem, this fund will not only create jobs but also develop a skilled workforce, foster innovation and enhance India's global competitiveness in the space market.”

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