BENGALURU: India’s top engineering and management institutes are no longer content with merely incubating startups. Increasingly, they also want to participate in the upside created by companies emerging from their own ecosystems.
Institutions including Indian Institute of Technology (IIT) Bombay, IIT Madras and Indian Institute of Science (IISc) Bengaluru are setting up venture funds to invest in campus-linked deeptech startups, as rising investor interest in sectors such as semiconductors, defence and spacetech pushes universities to play a larger role in the businesses they help build.
But why are they doing this now? How are these funds structured? And what kind of startups are they backing? Mint explains.
Which institutions have launched venture funds?
So far, IIT Bombay and IIT Madras have launched venture funds, while IISc Bengaluru is in the process of setting up one.
The funds are being structured through affiliated entities, incubators and alumni-backed networks because IITs and IISc operate as Section 8 entities, or non-profit organisations.
IIT Madras, through its research park, has partnered with venture firm Unicorn India Ventures to launch the IITM Unicorn Frontier Fund, a ₹600 crore vehicle with a ₹400 crore green-shoe option. The fund was announced in February, with Unicorn India Ventures set to manage deployment.
In December 2025, IIT Bombay, through its business incubator Society for Innovation & Entrepreneurship (SINE), launched Y-Point VC, a ₹250 crore early-stage fund.
IISc Bengaluru is planning a $25 million fund Category II AIF anchored by a trust comprising alumni of the institution.
Y-Point VC has received approval from the Securities and Exchange Board of India (Sebi), while IISc Bengaluru is yet to file its application with the regulator. The IITM Unicorn Frontier Fund is also expected to seek Sebi approval, according to a New Indian Express report.
Why are institutions launching these funds now?
For years, many of these institutions have acted as incubators for deeptech and research-led startups, offering grants, laboratory infrastructure, faculty access and mentoring support. But they typically did not participate in the financial upside created by successful companies.
That is changing as investor interest in deeptech grows amid rising US-China tensions, supply-chain disruptions and a growing policy focus on defence indigenisation and strategic technologies.
Sectors such as semiconductors, spacetech, climate technology and advanced manufacturing, areas where IITs and IISc already have strong research capabilities, are drawing greater investor attention.
Yet raising early-stage capital remains difficult for many deeptech startups in India. Experts say such businesses can take close to a decade to generate meaningful revenue, limiting the pool of investors willing to back them at the idea stage.
“There are VCs in India who want to invest in deeptech, but at the time they come into these companies, its too late. They need to make progress in their first 2-3 years of existence,” said CS Murali, chairman, STEM Cell at the Foundation for Science, Innovation and Development at IISc Bangalore, explaining why they're launching their own fund. “There's no other way to fill this gap. Companies that have raised money quickly are the exception, not the rule.”
That creates an opportunity for institutions already supporting such startups through grants, infrastructure and technical expertise.
The ambition, at least in part, is to emulate models such as Stanford and MIT, where universities play a deeper role in commercialising research and supporting startup ecosystems around their campuses.
Where are these funds investing?
All three institutions are focused on deeptech sectors that typically require long development cycles and substantial early-stage capital.
IISc Bangalore plans to invest across spacetech, cybersecurity, defence technology, agriculture, climate technology and materials science. The fund expects to back 12-15 pre-seed and seed-stage startups with cheque sizes of up to $500,000.
IIT Bombay’s Y-Point VC will invest in artificial intelligence and advanced computing, advanced manufacturing, next-generation materials, healthcare and life sciences, climate technology, and space and defence technology. The fund plans to invest up to ₹15 crore across 25-30 companies.
IIT Madras’ IITM Unicorn Frontier Fund is focused on semiconductors, spacetech, climate and energy technology, defence technology and robotics. It plans to invest in more than 25 companies, with average cheque sizes of ₹8-10 crore.
What do universities gain from this?
The immediate attraction is the ability to participate in the value creation generated by startups emerging from their own ecosystems.
Beyond financial returns, institutions also stand to deepen their role in commercializing intellectual property and research developed on campus, while potentially recycling investment gains into future funds.
Over time, successful startup ecosystems could also help institutions attract larger alumni contributions and external funding.
Stanford’s endowment, built partly on early-stage equity gains from companies including Google, has helped the university expand support for student- and professor-led startups.