India's deeptech sector avoids valuation excess, says Piper Serica

India's deeptech sector is maintaining disciplined valuations despite emerging as an attractive investment destination, according to Ajay Modi, Director at investment firm Piper Serica. The veteran investor attributed the measured approach to the gradual pace at which global capital is entering the deeptech ecosystem, coupled with geopolitical uncertainty that has dampened speculative investment flows.

"In the deeptech ecosystem that we are talking about today, we do not have that irrationality kicking-in yet because global capital is slowly and steadily finding its way into that ecosystem," Modi told PTI. His comments come as parts of India's broader startup sector grapple with severe valuation corrections following years of frenzied funding.

The contrast with other segments became stark last week when UpGrad acquired edtech startup Unacademy for just over USD 200 million, marking a 94 percent decline from its peak valuation of USD 3.44 billion in 2021. While such dramatic resets have troubled the edtech and consumer-focused startup spaces, deeptech ventures appear to have escaped similar excesses.

Modi's assessment suggests that deeptech's relatively nascent stage as an investment category, combined with the sector's inherent capital intensity and longer development cycles, has insulated it from the speculative overheating that characterized other segments. As global investors increasingly look toward technology-driven solutions to infrastructure, manufacturing, and energy challenges, Modi indicated that deeptech remains a compelling but rationally-valued opportunity for quality-focused investors.