Ex-Defence Secretary Ajay Kumar Enters VC Industry with Mounttech Growth Fund: Report

Kumar stated that central government’s initiatives including the Defence ministry’s flagship programme for startups- Innovations for Defence Excellence (iDEX) has increased manifold the opportunities to build startups in the defence and aerospace sectors in the country
Start-ups have immense potential to take off with India's burgeoning defence, aerospace and deeptech sectors.
Start-ups have immense potential to take off with India's burgeoning defence, aerospace and deeptech sectors.

Ajay Kumar, who retired as India’s defence secretary in 2022, has taken a plunge in the venture capital industry by setting up a new firm, Mounttech Growth Fund, focusing on early-stage start-ups in the burgeoning defence, aerospace and deeptech sectors, as per a report by The Economic Times.

Kumar’s Rs 250 crore fund, which has secured approval from the Securities and Exchange Board of India (SEBI) has received subscriptions worth Rs 280 crore and is set to invoke green-shoe option for another Rs 250 crore, people aware of the matter told ET.

A retired 1985 Indian Administrative Officer from the Kerala batch, Ajay Kumar is an alumnus of IIT Kanpur.

He will be the chairman of the fund with senior telecom industry executive Ravi Sethia acting as CEO.

The firm has also on boarded top retired armed forces officers as advisors, in addition to eminent industrialists and business professionals. These include former Indian Air Force chief  RKS Bhaduria and former Indian Navy vice chief SN Ghormade.

The first scheme of the fund is called Kavach.

Primarily sponsored by Suryakant Dalmia, board member of Dalmia Securities, the fund includes multiple other high-net-worth individuals and domestic family offices as limited partners or sponsors.

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Speaking to ET, Kumar stated that central government’s initiatives including the Defence Ministry’s flagship programme for startups- Innovations for Defence Excellence (iDEX) has increased the opportunities to build startups in the defence and aerospace sectors.

Under the iDEX programme, the defence ministry provides grants to startups building in these sectors, and offers contracts to develop products and technologies for use by Indian defence forces.

According to government data, it is reported that iDEX is currently engaged with about 400 start-ups and small scale enterprises. So far, the government has cleared procurement of 35 items, worth up to RS 2,000 crore.

In 2023, companies in the aerospace, defence and maritime sectors received $230 million in funding over 67 rounds whereas as in 2024 it has so far raised $74.1 million through 28 funding rounds, according to data by Tracxn.

"Almost two-thirds of the defence procurement is from domestic companies…and this presents a huge opportunity for Indian startups to build and scale,” Kumar told ET, adding that the new fund would soon finalise its first investment in the space sector.

Kumar stated that the fund would forge tie-ups with other specialised venture capital firms and incubators at academic institutions such as Indian Institute of Science in Bengaluru and Indian Institute of Technology-Kanpur in an effort to source deals.

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