Indian GenAI Startups Need To Solve Niche Problems To Secure Big Cheques, Say VCs

At a time when the number of startups focussed on generative artificial intelligence (GenAI) are on the rise in the country, venture capitalists believe that these startups can raise big funding only if they can solve India-specific problems.

During a panel discussion on the topic, “Fuelling GenAI: What Investors Think About The Revolution?”, at Inc42’s ‘The GenAI Summit’,  investors highlighted that very few Indian startups have succeeded in bagging big cheques from VCs.

Lightspeed India partner Hemant Mohapatra, Bharat Innovation Fund cofounder and partner Ashwin Raguraman,  and Accel partner Prayank Swaroop were among the panellists. The discussion was moderated by  Exfinity Venture Partners’ managing partner Chinnu Senthilkumar.

Talking about the ticket size for funding, Swaroop said it is the US-based GenAI startups and companies which are drawing cheques in the range of $100 Mn and above since they are building foundational models.

“Unlike the US, I haven’t yet come across many companies in GenAI space in India across multiple verticals. We are still in the AI research and building models stage. However, enterprises are beginning to understand here how important it is to include AI in their operations,” Swaroop said.

Mohapatra likened the current GenAI trend to a hype cycle which may look uncertain. However the seasoned investor expects more clarity to emerge in the GenAI space in the coming years.

In terms of opportunities for GenAI startups in India, Mohapatra said using the technology to reduce the country’s dependence on China and the US for semiconductor and manufacturing can be an interesting use case.

“For instance, if we use GenAI to design the chips in India and overall in computing space, which hasn’t seen much disruption over the past few decades…That is one area where Indian native GenAI startups can focus on,” Mohapatra said.

It is pertinent to mention that Lightspeed led a $41 Mn investment round in the then five-month-old Bengaluru-based GenAI startup Sarvam AI in December last year.

Talking about the IndiaAI Mission, which has an outlay of over INR 10,000 Cr, Swaroop said there isn’t much clarity yet on how these funds will be deployed.

“For founders, I think they should build the products by thinking through the needs of Indian consumers and businesses. A few can go on building iterations on say GPT model,” Swaroop added.

Talking about the innovative use cases of GenAI, Raguraman cited an example of a startup which used AI to evaluate the emotional quotient of people and then monetised the same by selling the data it had at its disposal to advertisement companies.

Raguraman added startups and developers in India will require support from the government and industry bodies like NASSCOM to grow.

The GenAI Summit brought together who’s who from the GenAI space to discuss funding opportunities, impact of the technology on various sectors, among others.

Presented by Inc42 and Microsoft, co-presented by Invideo and QX Lab AI and supported by partners such as Venture Catalysts, Google Cloud, Mobavenue, MongoDB, and Peak XV, The GenAI Summit took place in Bengaluru on April 3rd.