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Investments in Indian GenAI start-ups grew by $160 million during the period – 2.7 times more than the first half
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Generative AI start-ups attracted $48 billion globally in the second half (H2) of the financial year 2024-25, as against $13 billion raised in the first half – up by 3.7 times, according to a Nasscom report. The total funding in GenAI start-ups in 2024-25 stood at $61 billion. Investments in Indian GenAI start-ups grew by $160 million during the period – 2.7 times from the first half. The country closed the year with $230 million funding in this space.
Funding rounds, however, declined by 27 per cent in the second half, noted the report.
Vertical diversification of funding was witnessed in India with Spotdraft, a legal tech GenAI start-up, securing $60 million funding. About 30 per cent of funding in H2 went into start-ups focused on AI-native cloud services, GPU-as-a-service, and energy-efficient AI chipsets, the report stated.
OpenAI closes with most funds
The foundational models (large language models), per the report, stole the thunder globally with 75 per cent of the funding going into start-ups building such models. India, however, drew a blank in this space with not much investment reported in this space despite the growing buzz around LLMs.
The incumbent global LLM players secured mega rounds, primarily driven by the need to procure Graphics Processing Units (GPUs) for building larger models and supporting rising inferencing demands.
Over $35 billion was invested in just OpenAI, xAI, and Anthropic. While OpenAI received $10.6 billion in funding in the third quarter, Anthropic pocketed $8.5 billion and xAI raised $6 billion, the report added.
Beyond these major players, over $2 billion was invested into highly-specialised domain LLMs with workflow orchestrations and agentic capabilities. This included funding for exclusive models targeting areas like healthcare and life sciences (clinician support, drug discovery, revenue cycle management), advanced coding LLMs, and legal workflow automation.
Diversity in India
While global investments were heavily skewed towards model makers, India’s GenAI investments saw diversified picks across the stack. Investments in India were more focused on applications (such as legaltech) and ‘Platform-as-a-service (PaaS) for GenAI/agentic AI applications’.
About 25 per cent of the funded start-ups pivoted from text-only models to build multilingual and multimodal models in areas like drug discovery, speech recognition, text-to-video, and conversational sales.
Six new AI unicorns emerged in the second half, including Hippocratic AI, Anysphere, Liquid AI, Writer, Sierra, and Poolside.
Published on May 16, 2025
This article first appeared on The Hindu Business Line
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