India may be miles away from San Francisco's Silicon Valley, but it is home to a wealth of engineering talent that is increasingly venturing into the AI startup space. Much like the early days of SaaS in India, funding for AI startups is relatively modest compared to their counterparts in the U.S. and Europe. Despite this, Indian AI startups are making significant strides, especially in generative AI, where venture capital is beginning to flow towards home-grown talent tackling local challenges with innovative solutions.

Indian startups are focusing on integrating support for regional languages in their AI models to meet the growing demands of local consumers. Companies like Pepper Content and Pocket FM are expanding their reach beyond India, entering international markets with their AI-driven products.

However, the path has not been easy. AI funding in India saw a significant drop, with investments falling nearly 80% from $554.7 million in 2022 to $113.4 million in 2023, according to Tracxn data shared with TechCrunch. In stark contrast, AI startup funding in the U.S. surged to $16.2 billion last year, up from $5.2 billion in 2022. To date, U.S. AI startups have attracted $13 billion in investments, whereas Indian AI startups have garnered just $92 million in the same period.

According to Dev Khare, a partner at Lightspeed Venture Partners India, there are ample opportunities for AI in consumer applications within India, particularly in content creation in regional languages, virtual influencers, and AI-driven entertainment.

Over the past 18 months, Lightspeed India and SEA have invested over $150 million in AI, encompassing new investments and follow-ons in existing AI startups. Globally, the fund has invested more than $1 billion across over 70 AI companies during the same period.

Both global and local investors are actively seeking AI startups in India, attracted by the country’s potential and its strategic advantage amid geopolitical tensions in other major markets. The increasing focus on data sovereignty worldwide also boosts interest in local startups developing promising solutions for India's vast population.

Top Funded Indian AI Startups

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• Founder: Bhavish Aggarwal

• Total Funding Raised: $50 million

• Key Investors: Matrix Partners India

• Focus: Building large language models (LLMs) in Indian languages and English.

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Founders: Vivek Raghavan and Pratyush Kumar

• Total Funding Raised: $41 million

• Key Investors: Lightspeed Venture Partners, Peak XV Partners, Khosla Ventures

• Focus: Full-stack generative AI offerings, including voice-based AI tools.

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• Founders: Ashwini Asokan and Anand Chandrasekaran

• Total Funding Raised: $57.4 million

• Key Investors: Avatar Growth Capital, Sequoia Capital, Alpha Wave Global

• Focus: Computer vision solutions for enterprise customers across various sectors.

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• Founders: Jo Aggarwal and Ramakant Vempati

• Total Funding Raised: $25 million

• Key Investors: HealthQuad, W Health, British International Investment, Google Assistant Fund

• Focus: AI-driven mental health chatbot used by millions worldwide.

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• Founders: Sharad Sanghi and Anindya Das

• Total Funding Raised: $20 million

• Key Investors: Matrix Partners India, Nexus Venture Partners, NTTVC

• Focus: Generative AI platforms for businesses, including AI/ML security and infrastructure.

Emerging Indian AI Startups to Watch

• Upliance AI: Specializing in AI for home appliances.

• Scribble Data: Offering domain-specific AI assistants for insurers.

• Expertia AI: Automating recruitment processes using AI.

• OnFinance: AI co-pilots for financial institutions.

• Helium: AI for e-commerce brands.

• Soket Labs: Developing multilingual LLMs.

• Kissan AI: AI solutions for agriculture.

• Shorthills AI: Custom AI tools for enterprises.