Former Defence Secretary Ventures into VC with Mounttech Growth Fund (Image Source: iStockphoto)
Ajay Kumar, who retired as India’s defence secretary in 2022, has ventured into the world of venture capital by establishing Mounttech Growth Fund. The new firm focuses on early-stage startups in the defence, aerospace, and deeptech sectors, capitalising on the burgeoning opportunities in these fields.
Kumar’s Rs 250 crore fund has already garnered approval from the Securities and Exchange Board of India (Sebi) and has received subscriptions amounting to Rs 280 crore. The fund is poised to invoke the green-shoe option for an additional Rs 250 crore, according to sources familiar with the matter. The fund’s first scheme is aptly named Kavach.
The primary sponsor of Mounttech Growth Fund is Suryakant Dalmia, a board member of Dalmia Securities. The fund also includes contributions from multiple high-net-worth individuals and domestic family offices as limited partners or sponsors. Kumar serves as the chairman, while former senior telecom industry executive Ravi Sethia holds the position of CEO.
To bolster its strategic edge, the fund has enlisted top retired armed forces officers as advisors, along with prominent industrialists and business professionals. Among them are former Indian Air Force chief RKS Bhadauria and former Indian Navy vice chief SN Ghormade.
Ajay Kumar told The Economic Times (ET) that the central government’s initiatives, including the defence ministry’s Innovations for Defence Excellence (iDEX) programme, have significantly expanded opportunities for startups in the defence and aerospace sectors. The iDEX programme provides grants to startups and offers contracts to develop products and technologies for use by Indian defence forces. Currently, iDEX is engaged with about 400 startups and small enterprises, and the government has cleared procurement of 35 items worth approximately Rs 2,000 crore.
Last month, the Centre announced the 350th contract under iDEX to hyperspectral earth-imaging startup Pixxel, backed by Lightspeed and Google, for designing and developing a miniaturised satellite.
“Almost two-thirds of defence procurement is from domestic companies… and this presents a huge opportunity for Indian startups to build and scale,” Kumar told ET. He added that Mounttech Growth Fund would soon finalise its first investment in the space sector. The fund also plans to collaborate with other specialised venture capital firms and incubators at institutions such as the Indian Institute of Science in Bengaluru and the Indian Institute of Technology-Kanpur to source deals.
In 2023, companies in the aerospace, defence, and maritime sectors received $230 million in funding over 67 rounds, according to data from Tracxn. So far in 2024, $74.1 million has been raised through 28 funding rounds.