The Rise of AI Startups in India: A New Frontier for Innovation

AI startups in India
Image credit: India Today

India, though far from Silicon Valley, is fast becoming a hotbed for AI talent. Engineers and tech enthusiasts are increasingly founding and building AI startups, marking a new chapter in India's tech ecosystem.

The AI Startup Landscape in India

The current AI startup scene in India mirrors the early days of SaaS in the country. Funding is limited, especially when compared to the billions funneled into AI startups in the U.S. and Europe. Despite this, there are promising signs, particularly in generative AI. Venture capital is increasingly being directed towards home-grown talent tackling region-specific problems and innovating in ways that rival their Western counterparts.

Indian startups are making strides by integrating local language support into their AI models to meet the growing demands of Indian consumers. Companies like Pepper Content and Pocket FM are leveraging AI to create applications that extend beyond India, even breaking into the U.S. market.

Funding Challenges and Opportunities

However, the journey hasn't been smooth. In 2023, funding for AI startups in India plummeted by nearly 80% to $113.4 million from $554.7 million in 2022. This is starkly contrasted with the U.S., where AI startup funding soared by 211% to $16.2 billion in the same period. To date, the U.S. has seen $13 billion invested in AI startups, while India has only seen $92 million.

Despite these challenges, industry experts like Dev Khare of Lightspeed Venture Partners India see significant opportunities. Khare points out that AI applications in consumer content, virtual influencers, short videos, and gaming have a strong potential in India. Lightspeed India and SEA have invested over $150 million in AI in the past 18 months, part of their global investment of over $1 billion in more than 70 AI companies.

The Global and Local Investor Interest

Global and local investors are keenly scouting for AI startups in India, attracted by the opportunity to diversify their portfolios and India's relatively stable position amidst global geopolitical tensions. Concerns over data sovereignty are also driving interest in local startups creating solutions for India's vast population.

Top Indian AI Startups

Krutrim

Image credit: Mint website 

• Founder: Bhavish Aggarwal
• Funding Raised: $50 million
• Key Investors: Matrix Partners India

Krutrim, founded by Ola's Bhavish Aggarwal, is India's first AI unicorn. Launched in December 2023, it focuses on developing a large language model (LLM) for Indian languages and English.

Sarvam AI

Sarvam AI
Image credit: Sarvam website 

• Founders: Vivek Raghavan and Pratyush Kumar
• Funding Raised: $41 million
• Key Investors: Lightspeed Venture Partners, Peak XV Partners, Khosla Ventures

Sarvam AI, co-founded by former collaborators on IIT Madras' AI4Bharat project, aims to offer full-stack generative AI services, including enterprise GenAI apps.

Mad Street Den

Image credit: Mad Street Den X handle 

• Founders: Ashwini Asokan and Anand Chandrasekaran
• Funding Raised: $57.4 million
• Key Investors: Avatar Growth Capital, Sequoia Capital, Alpha Wave Global

Mad Street Den specializes in AI solutions for enterprises across various sectors, from retail to healthcare.

Wysa

Image credit: Wysa website 

• Founders: Jo Aggarwal and Ramakant Vempati
• Funding Raised: $25 million
• Key Investors: HealthQuad, W Health, British International Investment, Google Assistant Fund

Wysa offers an AI-powered mental health chatbot used by millions globally, addressing mental health challenges with innovative tech solutions.

Neysa Networks

Neysa Network 
Image credit: Matrix Partners India

• Founders: Sharad Sanghi and Anindya Das
• Funding Raised: $20 million
• Key Investors: Matrix Partners India, Nexus Venture Partners, NTTVC

Neysa Networks provides generative AI platforms for businesses, aiding in the deployment and scaling of AI projects.

Emerging Indian AI Startups to Watch

Upliance AI

Upliance AI cooking assistant 
Image credit: Upliance YouTube 

• Founders: Mahek Mody and Mohit Sharma
• Funding Raised: $5.5 million
• Key Investors: Khosla Ventures, Draper Associates

Scribble Data

Image credit: scribble Data

• Founders: Venkata Pingali and Indrayudh Ghoshal
• Funding Raised: $2.3 million
• Key Investor: Blume Ventures

Expertia AI

Image credit: Expertia AI

• Founders: Kanishk Shukla and Akshay Gugnani
• Funding Raised: $1.3 million
• Key Investors: Chiratae Ventures, Endiya Partners, Entrepreneur First

OnFinance

OnFinance
Image credit: India Angel Network 

• Founders: Anuj Srivastava and Priyesh Srivastava
• Funding Raised: $1.1 million
• Key Investors: Silverneedle Ventures, Indian Angel Network, LetsVenture

Helium

Image credit: Helium Learn

• Founders: Shray Arora and Sidharth Sahni
• Funding Raised: $550,000
• Key Investor: Merak Ventures

Soket Labs

Image credit: socketlabs website 

• Founder: Abhishek Upperwal
• Funding Raised $140,000

Kissan AI

Image credit: Kissan AI

Founder: Pratik Desai

Shorthills AI

Image credit: Shorthills 

Founders: Pawan Prabhat and Paramdeep Singh

Conclusion

India's AI startup ecosystem is burgeoning, with a unique blend of challenges and opportunities. As funding dynamics evolve and local talent continues to innovate, the future looks promising for AI in India. Investors and entrepreneurs alike should keep a close eye on this exciting market.