February 3, 2025
India’s Growing AI Startup Ecosystem (India’s AI landscape, MATH’s AI landscape)
Startups in India are rapidly evolving, and artificial intelligence has become their core. With one of the most dynamic startup entrepreneurial atmospheres, the country is currently witnessing an incredible increase in AI-driven innovations and AI startups in India.
As many as 77% of Indian startups invest in AI and other deep technologies, thus underlining their critical role in the country’s future economy. This investment trend testifies to a collective recognition of AI’s transformative potential across industries, from healthcare to finance and beyond.
Also, India is home to around 100 GenAI start-ups, which have collectively raised more than $600 million since 2019.
As AI disrupts traditional business models across the board, Indian startups are a step ahead in this technology revolution. The growth of AI-powered solutions continues to innovate and opens so much potential for growth and development. With such a high percentage of AI-based startups in India, the country will surely become the global hub in the coming technological revolution.
India’s Stride in AI and GenAI Startups
The emergence of OpenAI’s ChatGPT created waves in the world’s economy; however, before November 2022, it was a little-known startup in the US. Since its release, the world has understood the power of GenAI, and while it is a boon for companies and organizations, employees have some concerns.
After the bloom of ChatGPT, the world has witnessed the rise of a plethora of Gen AI models and start-ups. However, the GenAI and AI ecosystem in India is still in its infancy. This doesn’t mean that we are behind in this race.
According to the YNOS database, there are around 2,00,000 recognized startups, and out of these, there are 6,636 AI-based startups in India. If we follow this number, then the percentage of AI startups is 3.07%. Now, this number might look small, but it has crossed the collected investment of INR 95,857 crore, and this value is still growing.
Leading AI startups like SarvamAI and Krutrim are focused on building LLMs, and startups like ObserveAI are focused on utilizing AI to offer customized customer and operational solutions to businesses.
Inc24 report estimates that India’s GenAI market is expected to flourish and is projected to cross the $17 billion mark by 2030.
Key Factors Driving India’s Startup Journey To Success
With over 300,000 startups, including 113 unicorns, the Indian startup ecosystem is dramatically changing to emerge as the third-largest in the world. This growth has been propelled by exponential growth in the adoption of advanced technologies by businesses and startups.
1. Emerging Hubs
Innovation hubs are emerging as vital in Tier-II and Tier-III cities across India. In fact, in 2023 alone, 40% of all AI-based startups in India came from these regions, marking the shift of startup hubs from Bengaluru and Delhi-NCR. Smaller cities leverage local talent and relative cost advantages to drive technological innovation and startup growth.
2. DeepTech Adoption
DeepTech is fast finding its place in India’s startup ecosystem. In 2023, 25% of all newly founded AI-based startups in India will have integrated DeepTech into their operations, a strong signal of their commitment to advanced technologies. This is a very important trend that will help facilitate progress and competitive advantage in several business sectors and industries as businesses find innovative ways to utilize AI.
3. Funding Trends
Funding trends for AI-based startups in India are cautious yet optimistic. While March 2024 saw an increase in funding compared to the previous two months, Q1 2024 declined year-over-year. The main sources of funding for AI startups are Angel Investors, Venture Capitalists, Government Funding Schemes, and Debt Funding.
4. Regional Dynamics
This growth of AI startups in India has been triggered by government initiatives in several states and union territories, thus improving regional diversity in the startup landscape. Bengaluru, Delhi-NCR, and Mumbai are continuing to dominate with the leading funding and deal counts. However, Tier II and III cities, in their emergence as significant contributors, convincingly demonstrated that the entrepreneurial spirit is pervasive across India.
How Does an Incubation Partner like MATH, Play a Significant Role in Boosting India’s AI Startup Ecosystem?
A startup incubator forms the foundation for nurturing budding ideas into successful enterprises, providing much-needed resources and guidance. Basically, incubators help guide AI startups in India through their infancy so that they can establish a strong base from which to expand.
- Expert Mentorship: Incubators provide tailored mentorship and advice to help startups refine their business models, strategies for reaching the market, and operational plans.
- Financial Support: Many times, they provide initial funding or introduce startups to potential investors, reducing the financial load that new entrepreneurs may experience.
- Training and Resources: Incubators often provide valuable training, workshops, and resources in legal, accounting, and marketing matters, giving startups the relevant know-how.
- Networking Opportunities: The incubators make useful connections between the startups and industry experts, partners, and other entrepreneurs so as to create relationships and collaborations.
The Indian AI startup ecosystem is buzzing and brewing. Such growth has taken place through the coming up of new hubs in Tier-II and Tier-III cities, increased adoption of DeepTech, and supportive yet cautious funding.
Complementing government initiatives, India’s entrepreneurial culture has made it a global tech leader. The MATH CoE (Machine Learning Artificial Intelligence) Center of Excellence serves as a focal point for knowledge sharing, research, and development.
We guide startups focusing on leveraging AI capabilities by providing access to state-of-the-art infrastructure, mentorship from industry experts, funding opportunities, and networking events. We also offer COHORT and accelerator programs along with workshops. Visit our website today for more information.
