Investors Are Rushing to Back AI Startups

India’s AI Startup Scene is Booming, And So Are AI-Focused VC Funds

India is seeing a surge in venture capital (VC) funds that focus on artificial intelligence (AI). These funds are betting on Indian founders building products in areas like consumer apps, enterprise tools, infrastructure, and AI software.

In the past two years, several new AI-focused VC firms have emerged. Boundless Ventures, started by former Kae Capital investor Natasha Malpani; SenseAI Ventures, founded by a former senior executive at the American fintech company FIS; and Wyser, launched by ex-tech leaders Satyakam Mohanty and Supria Dhanda, are among the key players.

Some existing SaaS-focused funds have also pivoted to AI. Upekkha, an accelerator launched in 2017, shifted to AI investments, while the Together Fund, led by Girish Mathrubootham, has been backing AI startups in the last couple of years. Aakrit Vaish, founder of Haptik, has also started a $75 million AI fund, supported by prominent tech investors.

Why AI Funds Are Growing

The AI sector is evolving quickly, creating opportunities for funds that can help startups with pitching, finding the right product-market fit, and scaling their businesses. Other AI-focused ventures in India include Z21 Ventures, co-founded by Innovaccer CEO Abhinav Shashank, and Grayscale Ventures, started by Siddharth Verma and Nikhil Kapur.

Experts say there is a growing need for specialist AI funds. Unlike SaaS, AI success isn’t easy to replicate, and each startup’s journey is unique. Funds that understand AI technology, intellectual property, and architecture can provide the guidance startups need to succeed.

Challenges Ahead

Despite growing interest, India still has fewer enterprise-focused AI applications. Founders often face challenges in building products and navigating complex enterprise sales. Global investors are also competing for the same deals, and many startups are moving to the US, driving up valuations and competition.

Even so, the AI ecosystem in India is vibrant and collaborative. Investors are eager to partner and support new companies, helping the next wave of AI innovation thrive.

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