Indian GenAI startups see 6 times surge in funding in Q2

New Delhi (The Uttam Hindu): Ranked sixth among major economies in the share of generative AI (GenAI) startup ecosystems, India saw a six-times surge in investments in the sphere of GenAI (quarter-on-quarter) in the July-September period, a Nasscom report said on Monday. The investments were fuelled primarily by B2B platforms and productivity solutions. Total funding grew 3.4 times year-on-year, led by investments in enterprise applications and Agentic AI. Funding activity gained significant momentum in Q2 FY25, with a record 20 funding rounds, marking a strong recovery after a sluggish Q1.

“The generative AI landscape is evolving rapidly, reshaping technology service providers and unlocking new capabilities. Providers are reevaluating strategies and increasing investments in technology and talent,” said Sangeeta Gupta, SVP and Chief Strategy Officer at Nasscom. Early-stage investments accounted for 77 per cent of all rounds, including angel and seed funding. Since the first half of 2024, innovative startups such as Nurix AI, Dashtoon, and Mihup have led the way with transformative solutions in workflow management, digital comic creation, and conversational analytics for contact centres. “Providers shifted from building use case portfolios to converting active PoCs into production-ready solutions. Partnerships surged by 25 per cent (on-quarter), focusing on product enhancements, joint go-to-market strategies, and government-led skilling initiatives,” according to the report.

Talent strategies transitioned from basic AI literacy to advanced and thematic upskilling, emphasizing platform integration and agentic AI capabilities. “The increasing maturity of the Indian GenAI ecosystem reflects its transition from exploratory use cases to scalable, production-ready solutions. This growth is fuelled by improving funding inflows, rising revenue realizations, and expanding applications in enterprise productivity and customer engagement,” the report mentioned.

“Q2 marked a key shift in India’s GenAI space, with funding focused on impactful applications that enhance productivity. Future success will rely on strategic innovations, pilot project results, and lessons learned along the way,” said Gupta.