The rise of Artificial Intelligence (AI) startups in India is picking up pace, driven by savvy young entrepreneurs who cater to a unique demand for AI in local languages. These ventures are eyeing both local and international expansion. Key sectors of interest include healthcare, education, finance, and e-commerce. The startups’ success will depend not only on technological innovation but also on their ability to educate their audience and instill trust in AI.
The Indian AI scene faces unique challenges, such as understanding their audience’s adaptability to new technologies. However, these obstacles haven’t dampened the fascination and need for AI solutions in India, a country that provides an extensive data collection ground for training AI systems
However, the aspiration to expand to the heavily competitive U.S. market calls for differentiated and robust AI solutions. Still, Indian AI startups seem confident in their ability to step up to the plate and go global.
Yet, financial roadblocks persist.
Indian AI startups targeting international growth
Tracxn data reveal that AI investment in India fell dramatically by almost 80% to $113.4 million in 2023 from $554.7 million in 2022. In contrast, investment in U.S. AI startups surged approximately 211% to $16.2 billion in 2023 from $5.2 billion in 2022.
This stark contrast points to a need for more concerted efforts and policy interventions to make India a more attractive destination for AI investments. To keep up with global advancements, India will need to address these funding challenges and invest in strategies such as education, skills development, and policy changes.
Despite these hurdles, Lightspeed Venture Partners India’s Dev Khare sees promise in India’s potential for consumer-driven AI applications focusing on virtual influencers, content creation in local languages, and AI-generated games and videos. He bases his optimism on the vast internet user base in India, second to only China.
In the last 18 months, Lightspeed India and SEA have poured over $150 million into AI, illustrating their steadfast commitment to AI’s potential. This includes new investments and added funds for AI-integrated existing ventures. Startups such as Krutrim and Sarvam AI stand out. While Krutrim has secured $50 million and is planning a significant language model for Indian languages, Sarvam AI aims to offer expansive generative AI solutions with an inspiring funding of $41 million.
These innovative companies reframe the role of AI technology in India, creating not only opportunities but also a roadmap for future AI ventures locally and globally.