India recorded the fifth highest investment last year in startups offering artificial intelligence (AI)-based products and services, according to Stanford University’s annual AI Index report. In 2022, the total investment in AI startups in India stood at $3.24 billion, which puts it ahead of countries like South Korea, Germany, Canada and Australia. Countries ahead of India in the list include the United States, China, United Kingdom and Israel.
The index also shows that AI startups in India received $7.73 billion in total funding over the past decade, making it the sixth-highest AI investment country between 2013 and 2013. 2022. Nearly 40% of this investment was made last year.
Among Indian AI startups, last year Chennai-based conversational AI startup Uniphore raised $400m in a Series E round, taking its valuation to $2.5bn. dollars. Among this year’s biggest fundraisers is Mad Street Den, the Chennai and US-based start-up, which raised $30 million in a Series C funding round led by Avatar Growth Capital.
Although global investment in AI has declined since 2021 due to the economic downturn, experts expect venture capital funding to pick up again this year, especially due to massive interest in AI products. generative and OpenAI’s ChatGPT among businesses and consumers.
“Given the unprecedented interest and growing industry sentiment that this is a step change in AI capabilities, I expect venture capital investment to continue. ‘accelerate over the next few quarters,’ said Kashyap Kompella, an AI analyst and managing director at research firm RPA2AI.
Aurojyoti Bose, principal analyst at GlobalData, also said that “the long-term outlook is likely to be bright” and that the rebound in deal volume and value in the fourth quarter of 2022 could be an indication of this.
According to findings from venture capital analytics firm Tracxn, investment in AI startups in India has doubled from $1.7 billion in 2020 to $5.2 billion in 2022.
“The potential for growth and return on investment from investments in AI companies is very high. Despite the current funding winter and economic downturn, AI startups are expected to experience this upward trend in the coming years. coming soon,” said Neha Singh, co-founder of Tracxn.
As Mint reported earlier, several Indian companies like Flipkart and MakeMyTrip are exploring the use of generative AI models in their products. Startups such as GupShup and Exotel have also announced chatbot-building platforms powered by OpenAI’s GPT models, which can be used by businesses to build ChatGPT-like chatbots.
Kompella pointed out that there are several startups in India that are building products on GPT models. “But a gap can only be established if there is something more – for example a custom data source, like Bloomberg’s FinanceGPT based on proprietary datasets, or innovative RLHF fine-tuning for cases of specific uses,” he added.
The Stanford report further shows that 54% of researchers working on large language models (LLMs) were from US institutions. However, last year researchers from Canada, Germany and India contributed to the development of LLM for the first time.
Kompella noted that building fundamental AI models requires deep pockets, but the financial returns are uncertain. He added that many AI startups have yet to find a business model.
“For example, Stable Diffusion is among the top three image-generating AI tools, along with Dalle-2 and OpenAI’s MidJourney. But despite this, it appears that Stable Diffusion is struggling to find a profitable business model. The AI units of big tech companies and leading companies like OpenAI are all in the heavy investment phase, not in the profit-generating phase,” Kompella said.