India’s AI Dream: Is India’s AI Revolution Set to Create 100 Unicorns?
India’s AI ecosystem is heating up, and everyone from tech enthusiasts to investors is feeling the buzz. With AI startups making headlines, raising funds, and launching innovative products, it seems like the country is on the brink of an AI revolution. But as the saying goes, all that glitters is not gold. While the vision of India birthing 100 AI unicorns in the next decade is tantalizing, it’s worth asking: is this a realistic goal or just a mirage?
The Hype vs. The Reality
Rahul Agarwalla, managing partner at SenseAI Ventures, is optimistic. In a recent podcast, he mentioned witnessing over 500 AI startups emerging in the past six months alone. That’s a phenomenal number, and it speaks volumes about the innovation bubbling up in the country. Agarwalla is confident that India will see around 100 AI unicorns in the next ten years. Sounds motivating, right? But hold on—let’s not get carried away.
The reality is that while India’s AI scene is thriving, it’s still largely powered by jugaad (a term that loosely translates to innovative fixes or workarounds) rather than venture capital. Many AI startups in India are more focused on leveraging existing infrastructure or building simple applications on top of others rather than creating groundbreaking technology. This is where the skepticism comes in. Can India truly become a powerhouse of AI innovation, or are we just scraping the surface?
The Early Stages of a Revolution
Arjun Rao, partner at Speciale Invest, adds a dose of reality to the discussion. He acknowledges the potential for successful AI companies emerging from India but is wary of making bold predictions. “It is fairly clear that we’re in the very nascent stages of this AI revolution,” Rao says. “Each year we’ll make progress and will need to iterate and solve problems along the way.” In other words, it’s a marathon, not a sprint.
The numbers back up this cautious optimism. According to AIM Research, Indian AI startups raised $560 million across 25 rounds in 2024—a significant decline of 49.4% compared to the previous year. Meanwhile, global AI startups raised around $27 billion in just three months this year. The contrast is stark, and it raises important questions about India’s place in the global AI landscape.
The Soonicorns Are Rising
Despite the slowdown in funding, AI remains a hot topic among investors. Alok Goyal, partner at Stellaris Venture Partners, points out that about 50% of the firm’s investments over the last year were in AI-first startups. But Goyal also cautions that the numbers around AI investing need to be taken with a pinch of salt. “AI today is like the cloud—almost every new startup is utilising it to varying degrees,” he says.
This brings us to the concept of “soonicorns,” or startups on the brink of becoming unicorns. While the dream of 100 AI unicorns in the next decade might seem ambitious, the rise of soonicorns is a more tangible outcome. Startups like Sarvam AI, Krutrim, TWO.AI, and Project Indus are slowly but surely making their mark. But for these soonicorns to reach unicorn status, they need more than just innovation—they need capital, talent, and the ability to scale.
The Money Factor: Dry Powder and the Unicorn Dream
The good news is that capital availability is not an issue. Rajan Anandan, managing partner at Peak XV Partners, recently highlighted that the VC ecosystem in India has $20 billion ready to be invested in startups, with AI being the most significant theme. Anandan sees potential for growth and innovation, and believes that India could make a significant impact on the global AI stage.
Antler, another VC firm, recently announced a $10 million investment in early-stage Indian AI startups. Rajiv Srivatsa, partner at Antler, emphasized that “NOW is the best time to build a startup in India!” With incubators and startup programs from tech giants like Google, NVIDIA, and JioGenNext, the ecosystem seems primed for growth.
But it’s not all smooth sailing. Investors have become more cautious, asking detailed questions during pitches and scrutinizing startups more closely than ever before. Gone are the days when VCs would invest in AI startups without a clear thesis. Now, they are risk-averse but better informed, making it both a challenge and an opportunity for startups to stand out.
The Road Ahead: Reality Check or Rocketship?
So, what does the future hold for India’s AI ecosystem? The dream of 100 AI unicorns is certainly ambitious, but it’s not entirely out of reach. The key will be in how these startups evolve—whether they can move beyond jugaad, secure significant funding, and build foundational AI solutions that can scale globally.
India has the talent, the market, and now, the capital to make this dream a reality. But as with any gold rush, there will be winners and losers. The startups that can navigate the complexities of the AI landscape, attract top-tier talent, and secure long-term investments will be the ones to watch.
In the end, India’s AI ecosystem is a work in progress—full of potential but also fraught with challenges. Whether it will give birth to 100 unicorns or a handful of success stories remains to be seen. But one thing is certain: the next decade will be a thrilling ride for AI in India, and everyone—from investors to entrepreneurs—will be watching closely.
