While India is far from San Francisco's “uncanny valley,” it has a huge pool of engineering talent, some of which is hopping on the train to become founders and builders of AI startups.
The state of India's AI startup ecosystem today is reminiscent of the early days of SaaS in the country. Funding is limited, especially compared to the billions of dollars raised by AI startups in the U.S. and Europe. But in areas like generative AI, there are signs of where venture capital money is flowing: it's going to home-grown talent solving uniquely local problems and bringing new approaches to the same challenges that companies in developed countries are tackling.
Some Indian startups are integrating local language support into their AI models to cater to the growing demands of Indian consumers, and Indian startups such as Pepper Content and Pocket FM are also using AI to create use cases for markets outside India and enter the US market.
That said, it hasn't been easy. In India, funding for AI startups, including companies working on infrastructure and services, fell nearly 80% to $113.4 million in 2023 from $554.7 million in 2022, according to Tracxn data obtained by TechCrunch. In contrast, funding for AI startups in the U.S. grew 211% to $16.2 billion last year from $5.2 billion in 2022. To date, investment in AI startups in the U.S. has reached a whopping $13 billion. Just $92 million has been invested in Indian AI startups over the same period.
Dev Khare, partner at Lightspeed Venture Partners India, told TechCrunch that India has some great opportunities for AI in consumer applications, including content creation in Indian languages, offering virtual influencers and using AI to create short videos and games.
“A pretty large majority of the SaaS market over the last decade has gone to existing markets and tried to replicate those markets with lower cost and better support. This very valid market has done great things in India. But you can't do that with emerging markets like AI or native AI. You have to take the risk and say, 'This is what the world will look like in a few years. That market doesn't exist today, but I believe it does. I'm going to build for it.' This is a bit of a new DNA for India. We've seen it happen,” he said.
Over the last 18 months, Lightspeed India and SEA have invested over $150 million in AI, including new and follow-on investments in existing AI-enabled startups. The fund has invested over $1 billion in over 70 AI companies globally during the same period.
Domestic and international investors are actively seeking out Indian AI startups as the country helps diversify investors' portfolios and is well-positioned amid ongoing geopolitical conflicts in key markets. Rising concerns over data sovereignty in countries are also a reason to look for local startups building promising solutions for the world's most populous country.
Most highly funded Indian AI startups
Crutrim
Founder: Bhavish Agarwal
Total raised: $50 million
Lead investor: Matrix Partners India
Led by Ola founder Bhavish Agarwal, Kultrim (a Hindi word of Sanskrit origin meaning “artificial”) is India's first unicorn AI startup, reaching a $1 billion valuation with just $50 million in funding. Founded in December 2023 in Bangalore, Kultrim is building large language models (LLMs) based on Indian languages and English. It launched its AI chatbot earlier this year but (like its Western peers) received backlash for inaccurate results upon public beta launch. The startup claims that its AI model is improving through regular updates.
Salvam AI
Founders: Vivek Raghavan and Pratyush Kumar
Total raised: $41 million
Lead Investors: Lightspeed Venture Partners, Peak XV Partners, Khosla Ventures
Sarvam AI (meaning “all” in Telugu) is another notable Indian startup working on LLMs based on Indian languages. The startup was co-founded by Vivek Raghavan and Pratyush Kumar, who previously worked with tech veteran Nandan Nilekani at IIT Madras' project AI4Bharat. The Bangalore-based startup came out of stealth in December and aims to offer a full-stack generative AI product, including a platform that enables businesses to develop GenAI apps based on Sarvam's LLMs and contribute open-source models and datasets. In February, Sarvam AI partnered with Microsoft to launch its speech-based AI tools and bring its Indian language speech LLMs to Azure.
Mad Street Den
Founders: Ashwini Asokan and Anand Chandrasekaran
Total raised: $57.4 million
Lead Investors: Avatar Growth Capital, Sequoia Capital, Alpha Wave Global
Mad Street Den is a computer vision startup that builds AI solutions for enterprise clients. Co-founded in 2016 by neuroscientist-designer couple Ashwini Asokan and Anand Chandrasekaran, the Chennai-based startup initially deployed vision technology for the retail sector, but has since expanded into sectors like finance, insurance, healthcare, and logistics. The company's larger vision goes beyond the domestic market with its mission: “Making the world AI natives.”
Wisa
Founders: Joe Agarwal and Ramakant Vempati
Total raised: $25 million
Major investors: HealthQuad, W Health, British International Investment, Google Assistant Fund
Wysa is a mental health tech startup that offers an “emotionally intelligent” therapist chatbot that uses AI to help users talk about their feelings. The chatbot, which is managed by Wysa's mental health experts, is used by more than 6.5 million people across age groups in over 95 countries. Based in Bengaluru, the startup also has operations in Boston and London, raised $20 million in July 2022. The company was co-founded by Joe Agarwal and his husband Ramakant Vempati in 2016 after Agarwal fell into a deep depression.
Naisa Network
Founders: Sharad Sanghi and Aninda Das
Total raised: $20 million
Lead Investors: Matrix Partners India, Nexus Venture Partners, NTTVC
Mumbai-based Neysa Networks is led by experienced tech entrepreneur Sharad Sanghi, who previously founded cloud and data company Netmagic Solutions. The company offers a range of generative AI platforms and services to enable enterprises to adopt AI and machine learning. The startup's Nebula platform is used to scale AI projects with on-demand GPU infrastructure to train and infer AI models on the cloud. Its Palvera platform provides multi-vendor and multi-input observability, enabling users to proactively identify issues using a unified data lake and existing telemetry datasets. The Aegis platform focuses on AI/ML security.
Here are some of the Indian AI startups to watch
Up Alliance AI
Founders: Mahek Modi and Mohit Sharma
Total raised: $5.5 million
Lead Investors: Khosla Ventures and Draper Associates
Upliance AI brings AI to home appliances to help people create over 500 new dishes at home. The Bengaluru-based startup plans to raise $10 million to $15 million early next year to expand its market presence.
Graffiti Data
Founders: Venkata Pingali and Indrayud Ghoshal
Total raised: $2.3 million
Lead investor: Bloom Ventures
Scribble Data provides domain-specific AI assistants to leading insurance companies across North America and Europe, helping them scale their back-end business capabilities. The company is headquartered in Bengaluru with a sales team in Toronto.
Expert AI
Founders: Kanishk Shukla and Akshay Gugnani
Total raised: $1.3 million
Lead investors: Chiratae Ventures, Endiya Partners, Entrepreneur First
Bengaluru-based Expertia AI uses AI to help companies automate recruiting and reduce hiring time to 24 hours. It uses proprietary deep learning algorithms to automate talent sourcing, screening, outreach, engagement, assessment, interviewing, and scheduling. The startup has now raised $3 Mn from lead investor with participation from existing investors.
On Finance
Founders: Anuj Srivastava and Priyesh Srivastava
Total raised: $1.1 million
Lead Investors: Silverneedle Ventures, Indian Angel Network, LetsVenture
Bengaluru-based OnFinance empowers banks and asset managers through its AI co-pilot across a range of functions from equity research to compliance and asset management.
helium
Founders: Shreyas Arora and Siddharth Sahni
Total raised: $550,000
Lead Investor: Merak Ventures
Delhi-based Helium empowers e-commerce brands with direct-to-consumer web stores powered by AI and a responsive headless storefront.
Socket Labs
Founder: Abhishek Upperwal
Total raised: $140,000
Bengaluru and Gurugram-based Soket Labs, an AI research firm that has developed the open-source Pragna-1B multilingual LLM through its in-house GenAI Studio, is planning to raise $7 million in a seed round within the next 2-3 months.
Kissan AI
Founder: Pratik Desai
Based in Surat with an office in the Bay Area, KissanAI serves agriculture and allied sectors using its GenAI platform AgriCopilot and Dhenu Family, a sector-specific Masters in Agriculture Law. The startup is currently self-funded and backed by the founders' family and friends, but plans to raise $3-4 million between its seed and Series A rounds.
Short Hills AI
Founders: Pawan Prabhat and Paramdeep Singh
Gurugram-based Short Hills AI was founded in June 2018 by Pawan Prabhat and Paramdeep Singh, who previously founded accounting training platform EduPristine. The bootstrapped startup builds custom AI tools for enterprises and counts the NHS and PwC among its initial 12 clients in the US and India.