Kavach for Defence Startups: Ex-Bureaucrat Unveils Early-Stage VC Fund

Ex-defence secretary launches new VC fund! This fund backs startups that protect India and reduces dependency on defence imports. The Fund aims to be India's Kavach for deep tech & self-reliance in critical sectors. Read the details.

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Funding Defence Dre

Ajay Kumar, a former bureaucrat who retired as India’s Defence Secretary in 2022, has made a significant transition into the venture capital industry. Kumar has established the Mounttech Growth Fund, a new venture capital firm focused on nurturing early-stage startups in tdefence, aerospace, and deep tech sectors.


Mounttech Growth Fund has swiftly gained traction, raising Rs 250 crore and receiving subscriptions worth Rs 280 crore. The fund has also secured approval from the Securities and Exchange Board of India (SEBI) and plans to invoke a green-shoe option for an additional Rs 250 crore.

What is the Kavach Scheme?

The first scheme under this fund, aptly named Kavach, is set to revolutionize the aerospace and defence startup ecosystem. Sponsored primarily by Suryakant Dalmia, a board member of Dalmia Securities, Kavach has backing from various high-net-worth individuals and domestic family offices.


Leadership and Advisory Team of VC Fund

Ajay Kumar serves as the chairman of Mounttech Growth Fund, with former senior telecom industry executive Ravi Sethia taking on the role of CEO. The fund has also enlisted top retired armed forces officers as advisors, including former Indian Air Force chief RKS Bhadauria and former Indian Navy vice chief SN Ghormade, alongside eminent industrialists and business professionals.

Strategic Partnerships and Initiatives


In a recent strategic move, the fund signed a Memorandum of Understanding (MoU) with T-HUB at DAIS 2024. This initiative aims to support startups dedicated to making India 'Atmanirbhar' (self-reliant) in critical technologies, particularly in national security, defence, aerospace, and digital communications.

During the signing of the pact, Ajay Kumar said, “I and some of my friends take a lot of pride in creating a venture capital fund that focuses on the strategic sectors like defense and aerospace, which requires significantly more capital and risk-taking than software or e-commerce investments.”

The Growing Aerospace and Defence Startup Ecosystem


India aims to cut its reliance on imported defence equipment and technology while boosting its defence exports to capture a portion of the $2.1 trillion global defence market.

Through the Make in India initiative, India seeks to decrease its dependence on imported defence equipment and technology, while increasing its defence exports to capture a share of the $2.1 trillion global defence market.

Currently, India accounts for 3.7% of global military spending, making it the third-largest military spender in the world at $76.6 billion in 2022, following the U.S. and China.


India’s aerospace and defence sectors have seen a surge in startup activity, bolstered by central government initiatives such as the Defence Ministry’s Innovations for Defence Excellence (iDEX) program. Under iDEX, the ministry provides grants to startups and offers contracts to develop technologies for the Indian defence forces. Currently, iDEX engages with approximately 400 startups and small enterprises, with government procurement of 35 items worth about Rs 2,000 crore.

Impactful Investments and Future Prospects

In 2023, companies in aerospace, defence, and maritime sectors received $230 million in funding over 67 rounds, according to Tracxn data. In 2024, $74.1 million has been raised through 28 funding rounds so far. The latest iDEX program has Rs 25 crore available in grants, positioning the space sector to be a significant beneficiary of the R&D program.


The Mounttech Growth Fund aims to forge tie-ups with specialized venture capital firms and incubators at academic institutions such as the Indian Institute of Science, Bengaluru, and the Indian Institute of Technology, Kanpur. This strategic approach will help source and nurture promising deals within these critical sectors.

The Mounttech Growth Fund has the potential to play a pivotal role in driving innovation and technological advancement in India’s aerospace and defence sectors. By supporting startups and fostering a robust ecosystem, the fund aims to contribute to India's goal of self-reliance in critical technologies, paving the way for a secure and technologically advanced future.

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