India is very far from the “uncanny valley” of San Francisco. Still, it has a massive trove of engineering talent, and some of those people are hopping on the train and becoming founders and builders of AI startups.
Today's AI startup ecosystem's story in India is reminiscent of the early days of SaaS in the country: Funding is constrained — especially compared to the billions that AI startups in the U.S. and Europe are raising. But in areas like generative AI, we’re spotting signs of where VC money is being channeled. It’s going to home-grown talent, solving problems particular to their part of the world and bringing new approaches to the same challenges their developed-country counterparts are tackling.
Some Indian startups want to integrate local language support into their AI models to address growing consumer demand. A few Indian startups, such as Pepper Content and Pocket FM, also leverage AI to create use cases for markets beyond India and enter the U.S. market.
That’s not to say it’s been easy. In India, funding for AI startups — including those working on infrastructure and services — dropped nearly 80% in 2023 to $113.4 million from $554.7 million in 2022, according to the Tracxn data shared with TechCrunch. In contrast, AI startup funding in the U.S. grew about 211% to $16.2 billion last year from $5.2 billion in 2022. To date, AI startup investments have hit a whopping $13 billion in the U.S. In that same period, just $92 million has been invested in Indian AI startups.
Dev Khare, a partner at Lightspeed Venture Partners India, told TechCrunch that India has some good opportunities for AI in consumer applications, whether creating content in Indian languages, offering virtual influencers, or creating short videos and games using AI.
“A decent majority of the market in SaaS in the last ten years has been going off to established markets and trying to replicate those at…