How Many AI Startups Are There in India? Mapping the Rise, Regions, and Rapid Growth!
Here’s a number that will shock even the most ardent deniers of AI who consider it to be a fad created by tech companies; a total of ₹95,857 crore rupees was invested in AI startups of India! ........
While the subjective debate of whether AI will take over humans or not is debatable, it seems that AI has already taken over the tech and startup landscape not just in our country, but all around the world. So how has AI become such a prominent force in almost every industry?
The internet revolutionized the world in the early nineties and such was the impact of this “new” tech at that time, the tectonic shift can still be felt today. It seems that every device now needs to be connected to the internet. So the question is, can AI deliver the same impact as the internet did at the turn of the millennia? Very likely!
Here’s a number that will shock even the most ardent deniers of AI who consider it to be a fad created by tech companies; a total of ₹95,857 crore rupees was invested in AI startups of India! This amount is more than the health budget of our country for 2024.
The AI startup ecosystem in India is evolving and developing at break-neck speeds and there are no signs of slowing down. One of the reasons for this incessant growth is how compatible AI is with almost every industry. From the automobile industry to management software, AI can be used to improve the performance of every industry. In many ways, AI technology is what computers were in the early 80s and 90s; they reduce human workload, improve results and efficiency, and are cheaper as well, at least in the long run.
AI Startups in India - Fact Checked
Let’s take a look at the current scenario of AI startups in India and where everything sits. India has seen a boom in not just AI startups, but in multiple other industries. A booming industry means that there is a lot of money to be made, and to be invested. But it seems that AI startups are taking the largest slice of the funding ‘cake.’
The number of AI startups to this date is 6,636. According to the YNOS database, there are over 2,00,000 recognized startups in India. Going by this number, the percentage of AI startups in India is around 3.07%. But this small 3.07% has ₹95,857 crore rupees invested and the number is still growing.
The average age of the AI startups in our country is 5 years and the main source of funding includes:
Apart from a combined funding of around one lakh crore, AI startups have also secured a loan of ₹4217 crore through various banks, FIs, and other sources.
The Geographical Hot Spots for AI Startups
In India, Southern states like Karnataka, Tamil Nadu, and Telangana stand out as the leading geographical hotspots for AI startups. These states collectively host more than one-third of all AI startups in the country.
Here’s an analysis of the main reasons why certain states have become the hotspots for new AI startups with a rank-wise list of 5 states with the highest concentration of the top AI startups in India:
i) Karnataka (1363 AI Startups): Karnataka holds the crown for the most AI startups in India, thanks in large part to its capital city, Bangalore. This city is a goldmine for AI ventures due to its ideal tech ecosystem. Bangalore boasts some of India's best engineering schools, churning out talented individuals.
On top of that, the city has a strong technological infrastructure, providing the foundation for innovation. The Karnataka government further actively supports AI development. Initiatives like the Karnataka Startup Policy and incubation programs offer financial aid, mentorship, and other resources, giving AI startups the perfect environment.
ii) Maharashtra (1143 AI Startups): Maharashtra isn't far behind Karnataka in the AI startup race. Its strength lies in its financial infrastructure. As India's financial capital, Mumbai attracts a wealth of funding, making it an ideal breeding ground for AI ventures.
Maharashtra also has a big tech startup industry, particularly in cities like Mumbai and Pune. This existing tech ecosystem seamlessly integrates with AI, making it a hotbed for the Indian AI revolution.
iii) Delhi (640 AI Startups): With over 640 AI startups, Delhi is also a major contributor to the AI startup ecosystem in India. This can be attributed to its diverse range of industries, many of which have found AI highly relevant. From healthcare to finance, AI startups in Delhi are helping established businesses to automate and save resources.
Delhi is a financial hub home to several prominent venture capital firms and angel investors. This easy access to funding allows AI startups to secure the resources they need for research, development, and scaling their operations.
iv) Tamil Nadu (516 AI Startups): Tamil Nadu's edge in AI startups stems from its excellent education system. Top-ranked institutions like IIT Madras draw the brightest minds in AI and tech from all over India. This environment nurtures creativity and allows the talented workforce to tackle advanced projects more readily.
While strong technology resources, industrial demand, and a solid economy are crucial for AI startups in many southern states, Tamil Nadu stands out with its exceptional human talent.
v) Telangana (513 AI Startups): Similar to other southern states, Telangana boasts excellent educational institutions continuously training skilled talent for the AI industry. But what truly sets Telangana apart is its location. Located close to other prominent Indian IT hubs, it allows for an environment where AI startup ideas in India can grow collaboratively.
Initiatives like T-Hub, one of India's biggest startup incubators, provide support and resources for new startups. Government policies offer funding, streamlined regulations, and other incentives, making Telangana a popular choice for AI startups to take root.
What’s Behind the Rapid Growth?
AI startups in India are experiencing rapid growth, particularly in subcategories like machine learning, SaaS, analytics, marketing, healthcare, and edtech. It is not surprising to find the word “AI” in almost any consumer electronic device, be it an air conditioner or a refrigerator.
So how come AI is the one-size-fits-all element that can be placed in any industry and it integrates so well that it becomes not just a component, but many times the USP? The reason behind the rapid growth of AI can be distilled into its efficacy and its efficiency.
Unlike a computer or software that does analytical jobs very well, the AI not only does the same better, but it also understands the task with precision. To understand the importance of AI, let’s take a look at some of the core importance of this new technology for the technological landscape of India.
Rising Digital Adoption: India is not only experiencing a digital revolution but is soon becoming the epicenter of this revolution. Our country has become the tech hub in many aspects, providing digital services to other countries as well. So it seems fitting that AI in India will develop rapidly as it grows all around the world.
Need to Automate: With the digital revolution businesses and the country as a whole realize that simple and complex routine tasks need to be automated. But AI offers something beyond automation; it can understand tasks and their relations, and companies can make specific AI programs to do a collection of tasks rather than just one. In other words, AI is the best substitute for a human for most of the work.
The Potential of AI: The usability of AI is one thing while the potential is another, and most companies are betting on its potential rather than its current state. AI is evolving at blistering speed and it seems that this technology is getting better exponentially. So it would be safe to assume that in the coming years, we will be seeing AI get better at almost any task we throw at them; from consumer support to managing inventory in a warehouse, the AI will be able to do it with more efficiency and better efficacy.
Cost-effective: As more and more companies are coming up with better and more powerful AI models, the cost of using AI technology is going down steadily. While using the technology for large and complex tasks can be expensive as it takes a lot of processing, with better iterations, we can expect the cost to go down to the point when it would be cheaper for companies to use AI rather than hiring people for most of their tasks.
Universal AI: The appeal of AI comes from its universal nature of integration. AI tech can be designed and tweaked to fit any industry. So we are not talking about the fintech industry or the medical industry, but startups are creating AI technology that can be used for any industry. This means that the total addressable market is virtually limitless and the extra room allows for more companies to grow without much competition.
Why AI, Why Now?
Like a small spark close to a gasoline tank, the emergence of AI startups in India took its time but suddenly exploded out of proportion. Even though artificial intelligence (AI) has been around for a long time, its development has been slow and insidious. With technological advancements, AI has become more noticeable and widely accepted.
We've encountered early forms of AI in automated phone menus and basic chatbots, showing its long history. However, breakthroughs in deep learning, which excels at pattern recognition, have greatly enhanced AI's capabilities.
Along with the growing availability of data, AI models can now be trained and refined faster than ever. This enables startups to create specialized AI applications that meet a wider range of business needs.
While the unprecedented growth of AI can be overwhelming, it also comes with an influx of potential solutions. These are not just any solutions—they are faster, cheaper, and more economical. This means we can solve problems more quickly and at a lower cost than ever before.