The L&T Innovation Fund, the corporate venture capital (CVC) arm of Larsen & Toubro, is turning its attention to India's deeptech startup ecosystem after having spent most of its time investing abroad, according to a top executive.
“We've begun setting up the groundwork to help us get more comfortable with the Indian tech ecosystem,” said Sushma Kaushik, head of L&T Innovation Fund told Mint.
Kaushik spoke on the sidelines of the Indian conglomerate's Manthan event held on Friday, where the company showcased technologies from 21 drone startups across defence, infrastructure, logistics and public services.
The fund's interest in Indian deeptech comes as investor appetite for Indian deeptech has strengthened amid government efforts to promote indigenous technologies in areas such as space, quantum computing, defence, and telecom. While bullish on India's deeptech potential, the fund is scouting for investments, though like most CVCs it remains highly selective.
Investments in the sector have grown sharply since 2023, when total funding stood at $901 million across 468 deals, according to startup intelligence platform Tracxn. In 2026, funding so far has hit $2 billion across 179 deals, indicating that while investors have slowed down making spread-out investments, high-conviction bets are attracting larger cheques.
The five-year-old fund has made eight investments globally, including AI-driven cybersecurity company Cyfirma, and a company that builds digital twins for water treatment plants. Kaushik declined to name the other portfolio companies but said they largely operate in industrial AI.
The fund typically writes first cheques of $1-10 million and keeps its stake below 20%.
India bet
While its overseas investments have largely targeted companies at technology readiness levels (TRLs) 7 or 8, the fund plans to back Indian startups earlier, at TRLs 4 or 5. “If a company is at TRL 4 or 5, we want to help take them to 7 or 8,” Kaushik said.
Besides capital, the fund provides support in partnerships, empanelments, engagements with customers and go-to-market efforts.
Kaushik said India's appeal lies in the emergence of engineering-led founders building IP-driven businesses alongside improving access to capital.
Domestic corporate venture capital activity still lags global peers. Global CVCs like Bertelsmann India Investments, TDK Ventures, Qualcomm Ventures have been more active in the country than their local counterparts.
But according to Kaushik, it has more to do with finding the synergies than outright unwillingness. “Indian corporates are dabbling a little carefully in this ecosystem. When I talk to my other colleagues in the CVC ecosystem, they are still trying to figure out how to integrate any kind of an investment into their own business.”
Broader thesis
L&T's CVC arm looks at areas like AI, industry 4.0, green energy transition and industrial electronics. To be sure, all these sectors fit into the conglomerate's larger core business lines spanning engineering, procurement and construction projects, energy, semiconductors, data centres and hydrogen.
Within AI, Kaushik said that they look at both the physical, i.e., drones and robotics, as well as software, which includes physical AI data collection as well. “We feel that to make any hardware intelligent, you need AI to be both physical and software.”
Energy storage is another priority. Kaushik said rapid growth in AI infrastructure and data centres will sharply increase electricity demand, creating opportunities in deep transformer technology products, battery storage, grid technologies and power equipment.