The year 2024 was upbeat on the funding front for the Indian semiconductor space. What pushed the envelope last year was robust government support for the sector and a strengthened policy framework.

According to the data compiled by Inc42, at least seven semiconductor startups raised funding worth more than $28 Mn last year, compared to a little over $5 Mn raised by two startups the year before.

Given that India already has top design engineers and a large number of startups in the chip design space, most VC investments flowed into this category last year. Some ventures that kept investors engaged during the year were Mindgrove Technologies, FermionIC, and BigEndian Semiconductors.

While Mindgrove Technologies topped the funding charts, bagging $8 Mn, FermionIC took the second spot and raised $6 Mn during the year. Further, C2i Semiconductors, AGNIT Semiconductors and BigEndian raised $4 Mn, $3.5 Mn and $3 Mn, respectively, during the year.

Notably, funding raised by gallium nitride (GaN) wafer developer AGNIT Semiconductors and many-core processor developer Morphing Machines ($2.76 Mn) is emblematic of the fact that the Indian semiconductor space is maturing.

What’s also worth mentioning is that while semiconductor design startups in India have existed for decades, most of them relied on government support or limited private market investment until a few years ago.

However, this trend is now changing with India becoming a crucible for an increasing number of tech-capable ventures. Not to mention, many fabless semiconductor companies, such as Sankalp Semiconductor, Beceem Communications, and Cosmic Circuits have also been acquired by larger international players over the years.

Apart from the Indian semiconductor industry moving closer to maturity in 2024, several factors boosted venture capital (VC) activity in the sector. Some of these are the establishment of fabrication plants, government initiatives like design or production-linked incentives, and the advantages gained from the China 1 strategy.

Decoding The Funding Equation

Now, before diving into decoding the funding paradigm in the space, it is crucial to understand that semiconductor is a sunrise sector, therefore the amount of funding in the space is currently on a steady pace.

Other factors that often have a direct bearing on the funding quantum include capex-heavy business models and the development of technologies that have too long gestation time.

Not to mention, private funds, particularly venture capital, are more interested in fabless semiconductor companies that are into designing chips or creating IPs. This is because such ventures do not need much capital and have a shorter gestation period........

© Inc42