DeepSeek, D2C & India’s Startup Shake-Up

Welcome to Unbox!

Can India build its own DeepSeek? Will D2C startups rebound? What does Budget 2025 mean for founders?

In this first edition of the year, Unbox breaks down India’s startup shifts—from AI ambition vs. infrastructure gaps to fresh funding and regulatory moves. Plus, big wins from Nua, Rooter, and Zeno Health.

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Union Budget 2025 made a significant move towards tackling the slowdown in urban consumption with revised income tax exemption limits. The government expects the move to benefit an estimated 10 million taxpayers and drive spending.

The urban consumption slowdown came to the fore at the close of the third quarter of 2024, impacting spends across categories from essentials such as groceries to discretionary spends such as apparel and beauty and personal care.

Specific to startups, after abolishing the ‘Angel Tax’ last year, Budget 2025 announced a slew of measure that will benefit the ecosystem, directly and indirectly.

A $1.15 billion Fund of Funds aims to enhance financing, alongside a ₹20,000 crore Deep Tech Fund dedicated to R&D in advanced technologies. Startups incorporated by April 1, 2030, can now benefit from tax relief under Section 80-IAC, extending their runway to profitability. A new scheme will support 500,000 first-time entrepreneurs from underrepresented groups with term loans up to $24,000. To further ease the startup journey, a committee will be set up to review and simplify regulatory hurdles.

In a long-pending reform for Category I&II AIFs, the Budget clarified that the sale of securities by AIFs would henceforth be taxed as capital gains rather than business income, reducing compliance burdens. This will lower tax outgo and align AIFs with Foreign Portfolio Investors.

Rarely does a single product from one company shake global markets.

Yet, as 2024 began, Silicon Valley found itself blindsided by DeepSeek, China’s R1 AI model—reportedly built at a fraction of the cost of its Western counterparts.

DeepSeek’s revelation—that it used older, less powerful GPUs rather than cutting-edge AI chips like ChatGPT—challenged a core assumption: that state-of-the-art LLMs required the most advanced hardware. Suddenly, the AI arms race wasn’t just about who had the most GPUs, but who could do more with less.

The IT ministry soon set ambitious targets for developing “India’s DeepSeek.” Meanwhile, Indian entrepreneurs made bold moves—Bhavish Aggarwal’s $230 million investment in his AI startup, Krutrim, made headlines, and Deepinder Goyal posted about hiring product leaders who use AI as their “second brain.”

But for all the enthusiasm, one question lingers: If India has no shortage of talent, why is it still waiting for its DeepSeek moment?

The Infrastructure Gap

While the VC ecosystem debates AI’s future in India, a fundamental challenge remains: infrastructure. India’s data centres currently house between 5,000-6,000 GPUs. In comparison, Reliance Industries plans to build a 3 GW AI infrastructure requiring 50,000 GPUs. But Indian metros face severe power constraints, making such large-scale expansion difficult.

Without scalable infrastructure, can India truly compete in the AI race?

At Lightbox, we’re asking a different question: Are we focusing too much on AI ambition and not enough on AI readiness?

🚀 Onwards and upwards: We’re thrilled to witness D2C wellness brand Nua raise INR 35 Cr ($3.9M) in a Pre-Series C round led by Mirabilis Investment Trust. Having been part of Nua’s journey, we’re excited to welcome Mirabilis and other notable angels to the cap table as the company continues to scale. With strong momentum—profitability in Q2, INR 100 Cr net revenue ARR in Q3, and a path to INR 150 Cr ARR next quarter—this funding will accelerate Nua’s growth and mission.

 🎮 📈 Rooter’s winning streak: Gaming e-commerce platform Rooter too is celebrating big wins! Revenue surged 17% QoQ, with EBITDA losses shrinking by 19% QoQ, bringing them closer to profitability.

Their latest venture, Rooter Shop, is exceeding expectations with a 133% CMGR, leading India’s in-game transaction space. In just six months, it’s processing 200,000+ monthly transactions, with users spending an average of $25/month.

Founder & CEO Piyush Kumar breaks down the $1B In-App Purchases (IAP) opportunity and how Rooter’s content-to-commerce model is driving growth

🏆️ Win-Win: Zeno health Co-founder Siddharth Gadia praised the 2025 budget for its efforts to improve healthcare accessibility.

In some other fantastic news, the healthcare brand was recognized as Pharmacy Chain of the Year at The Economic Times Re-Pharma Awards, for its efforts in reducing healthcare costs by up to 50% through high-quality generic medicines.

✔️ Step in the right direction: For clinicians offering mental health support at Amaha, balancing packed schedules while managing multiple clients and providing quality care is no small feat. Recognising this, Amaha has launched a brand-new mobile app designed to provide clinicians with a seamless experience, enabling them to:

✅ Schedule & manage appointments effortlessly
✅ Chat with clients on the go
✅ Control their availability with ease

We had the pleasure of hosting students from the Jerome Fisher M&T Program at the Lightbox office in January. They engaged with some of our portfolio founders and Penn alumni, sparking insightful conversations on building for India. As part of their Mumbai immersion, the group also visited our portfolio company, Rebel Foods, for a behind-the-scenes look at the food tech startup’s operations.

Lightbox had the privilege of joining the 2025 Penn India Technology Innovation Forum in Mumbai. In a thought-provoking conversation, Nisaba Godrej emphasized the responsibility of businesses to create lasting impact by balancing people, planet, and profit, in discussion with Sandeep Murthy. A full house and an engaging exchange—an inspiring evening on the future of business and innovation.

🔙 Rewind: Lightbox Annual Day 2024

• Democratising healthcare: What happens when Zeno Health’s founder Siddharth Gadia and Shark Tank’s Namita Thapar sit down for a conversation? Discovery of out of box ideas on the state of India’s healthcare.

  🚨 The reality:
   🔴 57% of Indian women are anemic
  ⚕️ Only 1 in 5 doctors prescribe treatment
  💰 A $28B market remains underserved

  The problem? Millions lack access to affordable medicine. Here’s how Zeno Health is driving change through:

  
   ✅ Affordable generics
   ✅ Accessible health centres
   ✅ Patient education
   ✅ Doctor partnerships
   ✅ Regular testing

• Branding reimagined: Is brand building just marketing? CaratLane’s Avnish Anand begs to differ. At Lightbox Annual Day, he shared how prioritising design and experience over ads helped build a brand that truly resonates. Watch to see why this approach paid off.

• A wise choice: Why should startups prioritize governance from day one? Rebel Foods CFO Piyush Kakkad and Amaha VP Finance Jagdish Lulla break it down with Lightbox’s Rashmi Limaye Guptey, uncovering:

  💡 How early financial insights drive better decisions
   🌱 Why ESG must align with business strategy
   🔐 Why data security is non-negotiable

Are Indian VC’s still bullish on D2C startups?

D2C funding saw a steep decline in 2024—$595M across 115 deals, down from $1.4B across 134 deals in 2023. Average ticket sizes plunged 66%, marking the sharpest six-year drop despite past funding booms. Lightbox’s Sandeep Murthy spoke to Inc 42 on the challenges of differentiation in space as crowded as D2C. 

India’s VC downturn has challenged startups, including Lightbox’s portfolio. From tough cost decisions to balancing growth and profitability, many have weathered the storm and are now poised for growth. Throughout, Lightbox has been in the trenches with founders. Sandeep Murthy recently spoke to Mint about the past 18–24 months and the outcomes taking shape. Read more:

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