VCs warm up to startups in traditional industrial sectors

VENTURE CAPITAL FUNDING is steadily shifting towards startups operating in traditional industrial sectors. Business models which are gaining traction include contract manufacturing, renewable energy infrastructure, EV manufacturing and charging networks, and defence ancillaries.

- S SHANTHI

According to data from Tracxn, startups in these highgrowth industrial segments raised $534.05 million in funding so far this year, compared with $443.82 million in 2024. Speciality chemical firms such as Scimplify, Elchemy, and Mstack, and textile manufacturing startup Fantail are among those that have secured new rounds of funding over the past year. Many of these startups are building sensors, control systems, and Al-driven systems that help modernise legacy industries without requiring the establishment of new plants. Their ability to combine hardware intellectual property with software intelligence has made them particularly attractive to investors looking for defensible and high-margin businesses.