Now is the Best Time to Build AI Startups in India
Antler, a VC firm, recently announced a $10 million investment in early-stage Indian AI startups. Rajiv Srivatsa, partner at Antler, shared the news on X, emphasising: “NOW is the best time to build a startup in India!” Similarly, last month Google introduced several initiatives to enhance AI development in India, including a partnership with the MeitY Startup Hub to train 10,000 startups. At the Google I/O Connect Bengaluru 2024 event, the tech giant introduced the 2024 Class of the Google for Startups Accelerator: AI First program in India. This cohort includes 20 exceptional AI-first startups from diverse sectors such as gaming and manufacturing, chosen from over 1,030 applications nationwide. Earlier in March, there were reports that suggested India will partner with chip-making giant NVIDIA to procure up to 10,000 of its GPUs and NPUs and offer them at subsidised rates to local startups, researchers, academic institutions, and other users in a bid to boost the AI infrastructure in India. Further, even the JioGenNext team invests substantial time in collaborating with AI startups to offer comprehensive support and strategic insights tailored to their needs and challenges. The latest cohort, MAP’24, also featured 10 generative AI startups across sectors like healthcare, banking, legal services, and agriculture. The Indian government is also playing a pivotal role in fostering AI growth. The US-India AI Initiative by IUSSTF, aims to foster AI growth through idea exchange and collaboration in crucial sectors like energy, health, and agriculture. Additionally, the Ministry of Corporate Affairs announced MCA 3.0 to streamline regulatory filing using AI, and the Responsible AI for Youth program by MeitY aims to impart AI skills to government school students, enhancing their employability and practical knowledge. Not just the central, state governments are taking matters into their own hands. For example, the Telangana government launched the INAI (Intel AI) research centre in collaboration with IIT Hyderabad and the Public Health Foundation of India. This centre focuses on using AI to tackle healthcare and smart mobility challenges, particularly in rural and difficult terrains. Additionally, the state government has become the first in India to develop AI models in a regional language. In collaboration with Swecha, it is creating a Telugu language model, involving 100,000 students in a datathon to gather high-quality data. AI Funding Galore In the last six months alone, 43 Indian AI startups received $864 million in funding, according to data from AIM Research. Among these startups, Ema, an enterprise AI startup, raised $36 million in Series A funding. Bengaluru-based Simplismart, founded by Amritanshu Jain and Devansh Ghatak, raised $7 million in a funding round led by Accel, with participation from existing investors, including Anicut Capital, First Cheque, Sunn91, and Shastra VC. Another Bengaluru-based AI startup, Unscript, has raised over $1.25 million to date, which has been pivotal in developing its platform and expanding its market reach. Additionally, Bloq Quantum, an AI quantum software startup, secured INR 1.3 crore in a pre-seed round led by Inflection Point Ventures. Meanwhile, Ascendion, a provider of digital engineering services, reported a remarkable 382% increase in generative AI revenue in the first half of 2024 compared to the same period in the previous year. Not to forget, an old but important update, in a significant milestone for the Indian AI sector, Ola-backed Krutrim became India’s first AI startup to achieve unicorn status with a $50 million funding boost. Acquisitions, Partnerships, and More In terms of AI acquisitions, Protect AI acquired Bengaluru-based SydeLabs for $25 million to enhance LLM security. C5i acquired Bengaluru-based Analytic Edge for $20 million, marking its second Indian acquisition after Incivus, to enhance AI-driven marketing and sales solutions, as the firm aims for a INR 1000 crore turnover and a future listing in India. Coming down to AI partnerships, CoRover.ai recently partnered with AI auditing firm EthosAI.one to benchmark BharatGPT against industry leaders like GPT-4, Llama 2, and Gemini, ensuring reliability, fairness, and accuracy through continuous auditing and enhancements. Karya partnered with Microsoft Research to build one of the largest multilingual evaluations of Indian LLMs, involving over 90,000 human assessments of 30 models in 10 languages to address linguistic diversity and cultural nuances, alongside enhancing model performance and reliability. The AI startup scene in India is buzzing with activity, and the momentum shows no signs of slowing down. Mukund Jha, the co-founder and former CTO of Dunzo, is in discussions to secure INR 80 crore (approximately $6-10 million) from Together Fund for his new generative AI startup focused on automating quality assurance processes in businesses, integrating AI and SaaS technologies. Startups appear to be acting on Peak XV Partners MD Rajan Anandan’s words: “Our firm has over INR 16,000 Cr of dry powder. We just want more people starting up in AI.” As per Traxcn data, in 2022, AI startups in India raised $599 million. However, funding dropped sharply to $168.4 million in 2023, representing a decline of almost 71%. In 2024, nearly $96 million has been raised so far, marking a 61% increase over the same period in 2023 but still an 82% decline compared to the first half of 2022. Interestingly, India ranks third among the top five countries by business funding, surpassing both the United Kingdom and Germany. Source: WEF Government Regulatory Support Coming down to policies and guidelines, NITI Aayog introduced the National Strategy for Artificial Intelligence in 2018, outlining guidelines for AI research and development across various sectors, including healthcare, agriculture, education, “smart” cities, infrastructure, and smart mobility. Later in 2021, NITI Aayog published Part 1 – Principles for Responsible AI and Part 2 – Operationalizing Principles for Responsible AI. Recently, the government enacted the Digital Personal Data Protection Act in 2023, which can be utilised to address privacy concerns related to AI platforms. In its 2023 AI report, MeitY has outlined seven pillars for strategic AI development, including Centers of Excellence, Dataset Platform, and future skills initiatives. Further, the report also has recommendations for how India can leverage its demographic dividend and play to its strengths as an IT superpower to further the penetration of AI skills in the country, strengthening the AI compute infrastructure in India to support AI innovation through public-private partnerships (PPPs). To put it simply in the words of Paul Graham, the American computer scientist – “If you start a startup now to do something that barely works with AI, the next models will make it really work.” Seems like there’s no stopping for India in AI.  The time is NOW.
Interestingly, India ranks third among the top five countries by business funding, surpassing both the United Kingdom and Germany.
In the last six months alone, 43 Indian AI startups received $864 million in funding, according to data from AIM Research.
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Vidyashree is enthusiastic about investigative journalism. Now trying to explore how AI solves for all.