AI Remains a Magnet for Capital Even as Indian Investors Turn Cautious

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When Zee TV launched its new startup reality show Ideabaaz, all eyes were on the kind of ideas that would attract investors’ attention. Of the many pitches, only one AI startup walked away with funding. TimbuckDo, a Bengaluru-based venture, raised ₹2.25 crore, valuing it at ₹35.25 crore. 

Backed by the Government of Karnataka’s Elevate program, TimbuckDo is reimagining student employment through an AI-powered platform that connects students with flexible gig opportunities. 

State IT Minister Priyank Kharge said, “It’s the kind of idea that resonates with both India’s youth and the future-of-work narrative, one where AI is an enabler rather than a threat. The deal also marks a proud moment for Karnataka’s startup ecosystem, showing how state-backed incubation can help young ventures secure national investor visibility.”

However, is a lone funded AI company evidence of a pullback, or merely investors becoming more selective?

The Reality Show Signal

Ideabaaz isn’t the first televised platform to spotlight India’s AI entrepreneurs. Shark Tank India has had its share of AI-driven pitches over the past few years, but these are relatively few compared to consumer tech or D2C brands.

In 2023, CureSee, the world’s first AI-based vision therapy software for amblyopia (lazy eye), raised ₹50 lakh for 10% equity from Lenskart CEO Peyush Bansal. Its adaptive AI platform personalizes vision therapy, addressing a global healthcare gap.

The following year, Orbo AI, which develops AI- and AR-powered beauty tech, including virtual try-ons, secured ₹1 crore in exchange for a 1% equity stake from Vineeta Singh, CEO and co-founder of Sugar Cosmetics, on Shark Tank India Season 3.

By 2025, NeoSapien entered the scene, securing ₹80 lakh from the Executive Director of Emcure Pharmaceuticals, Namita Thapar, to launch Neo 1, a wearable device that the company calls India’s first “AI-native device.” 

Across these seasons, the trend is evident: AI startups capture the interest of selective investors, especially when addressing tangible problems in the consumer, healthcare, or productivity sectors.

But what does data say about AI funding in India?

The Numbers Talk

According to data from Tracxn, India currently has about 1,420 AI companies, with 451 of them having raised venture capital or private equity funding. Together, these companies have secured approximately  $4.93 billion in funding to date.

Interestingly, 2025 hasn’t been a “down year” for AI funding. Up to October 2025, Indian AI startups have raised $616 million across 64 equity rounds, compared to $306 million across 99 rounds during the same period in 2024. That’s a 101% increase in total funding, but a 35% drop in deal volume.

So, while there’s less capital dispersion, the average ticket size per round is growing, suggesting that investors are betting big on fewer, more promising players rather than spreading their funds across early-stage experiments.

This pattern is even more pronounced in the generative AI segment, where a remarkable surge is witnessed. 

At the time of writing this article, generative AI startups had raised $441 million across 42 rounds, compared to just $108 million across 61 rounds in 2024, a massive 307% jump in total funding, despite fewer deals.

Where’s the Money Coming From?

The usual suspects continue to dominate India’s AI investment landscape. Global heavyweights, including Accel, General Catalyst, Bessemer Venture Partners, Eight Roads Ventures, and India’s Peak XV Partners, have maintained an active interest in the space.

However, there’s a clear shift in the accelerator scene. Y Combinator, once a launchpad for Indian tech startups, has dramatically reduced its number of Indian picks, from 66 startups in 2021 to just four in 2024. 

Meanwhile, other international players, like Techstars and Antler, are quietly doubling down on India. 

Techstars Seattle, for instance, backed four Indian AI companies, Visionify, Produx AI, ZippiAI, and Chi, as part of its 15th cohort in 2024. Antler, on the other hand, has invested in 30 new Indian startups in 2024 alone, bringing its India portfolio to 80 ventures.

This suggests that while the Silicon Valley funnel may have narrowed, new global accelerators are filling the gap, especially those looking to diversify beyond the US and European markets.

Quality Over Quantity

If the funding patterns hint at focus, the startup formation data confirms it. In 2024, India saw the founding of 272 new AI startups, the highest number in a decade. By October, another 107 new ventures had already been registered.

This steady growth indicates that, despite macroeconomic headwinds, founders remain bullish about AI’s potential. 

However, the sharper funding lens means that only the most differentiated ideas, especially those with commercial traction or strong technical defensibility, are likely to receive funding. 

As Ashwin Raguraman, Co-founder and Partner at Bharat Innovation Fund, explained to MIT SMR India, “We’ve been believers in AI long before GenAI became the buzzword it is today; the arrival of GenAI has significantly democratized AI.”

However, India’s AI sector, he warned, still faces hurdles such as a talent crunch at scale, limited compute infrastructure (which is slowly improving), go-to-market issues, and sluggish domestic adoption.

“We’ve begun building world-class AI in India for global use. The next leap is building AI in India for India—and we’re just getting started,” Raguraman said.

Bengaluru continues to be a leading center for AI innovation, with companies like Eka Care, which provides AI-driven EMR and patient engagement systems, at the forefront, according to Tracxn’s rankings. The city’s deep engineering talent pool, coupled with proactive state support programs, continues to anchor India’s AI momentum.