On October 25, the Government of India announced the setting up of a ₹1,000-crore venture fund exclusively for start-ups and MSMEs in the space sector. On Wednesday, Dr Pawan Goenka, Chairman of the space regulator, IN-SPACe, (Indian National Space Promotion and Authorization Center) revealed the thinking behind how the money would be invested.

Stressing that the venture fund is not meant to provide grant money, but will only take equity stakes in the investee companies, Dr Goenka said that the fund would not also be an “angel” or “seed” investor, but would be an early stage Series A or B investor.

It will typically take 2-3 per cent stake and stay invested for 10-12 years. The fund would expect to make returns, but would not mind lower returns than in other sectors, space being inherently risky, he said.

However, the fund might sometimes take around 10 per cent equity, in which case it might want a board position, he said on two occasions: once in a fireside chat with journalist Pallav Bagla, at the Indian Space Conclave, 2024, and later, in a formal interaction with journalists.

Category-II AIF

The fund would be structured as a Category-II AIF and will be managed by a professional fund manager guided by an independent investment committee, which in turn will be advised by an advisory committee.

Answering a question, Goenka said that the fund is not meant to support low ‘technology readiness level’, R&D projects. Any project underpinned by a convincing business plan could get the fund’s support.

Observing that the fund would be a “passive investor”, Goenka said that it would support both upstream (like rocket and satellite companies) as well as downstream (such as data, images), though, he saw more of initial investments going to upstream investees.

A government press release of October 25 said: “The ₹1,000 crore VC Fund will be deployed strategically over five years, supporting start-ups in various stages of growth. The annual investment range is projected to be between ₹150 crore and ₹250 crore, depending on the industry’s needs and growth opportunities.”

Risks and perseverance

Observing that “space business is not for instant gratification”, but taking risks and perseverance, Goenka said companies getting into the space business should look for “not incremental but disruptive” ideas. For this, IN-SPACe has hired four former scientists of the Indian space agency, ISRO, and would hire more. IN-SPACe would make available their expertise to space companies for free, Goenka said.

In the interaction with journalists, Goenka said that IN-SPACe had processed 577 applications, till Nov 1. This included launch vehicles and subsystems (67), satellites and subsystems (176) and space applications (110).

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