25 March 2025, Hyderabad: India is witnessing the emergence of Y-Combinator-style accelerators aimed at supporting artificial intelligence (AI) startups founded by Indian entrepreneurs. As AI continues to present massive opportunities, the rapid evolution of technology has necessitated the creation of ecosystems where founders can innovate, collaborate, and scale their ventures.
In the past 18 months, AI-focused residency programs and venture capital (VC) funds have actively catered to the rising number of AI-driven startups in India. Notable initiatives include Paras Chopra’s Lossfunk, a residency program dedicated to AI builders, the SaaS platform Upekkha, which has pivoted to an AI-focused fund, and Together Fund, backed by Girish Mathrubootham, which launched AI Studio to help founders navigate the AI landscape effectively.
A Growing AI-Focused Ecosystem
India has a well-established startup accelerator ecosystem, but many of these programs are sector-agnostic, focusing broadly on venture building, business growth, fundraising, and scaling. However, for emerging AI companies, this traditional model may not be sufficient. AI startups require specialized accelerators that emphasize real-world business use cases and the development of optimal models.
Manav Garg, Managing Partner at Together Fund, emphasized the need for AI-focused initiatives. “AI startups require a different approach that focuses on finding real business use cases and building the right model,” he stated. He further stressed the importance of rapid prototyping and iteration in AI development. “You put the product out there, and revenue jumps rapidly. But enterprises move on to the product very fast. So, rapid prototyping is crucial to reach the product-market fit stage quickly,” Garg explained.
Fueling AI Growth with Strategic Investments
With AI technology evolving at an unprecedented pace, multiple Indian startups are benefiting from early-stage investments. Together Fund, founded by Girish Mathrubootham of Freshworks and Eka’s Manav Garg, launched AI Studio to assist emerging AI companies in their formative stages. The initiative aims to provide critical guidance, funding, and resources to ensure startups can scale efficiently.
Speaking at an AI-focused event in Bengaluru, Paras Chopra, founder of Lossfunk—who previously sold his startup Wingify—highlighted the importance of AI research. He cited a recent research paper that laid the foundation for the latest large language models, noting that it was co-authored by Indian researchers working abroad. “India has the talent, but we need to create an enabling environment that supports AI entrepreneurs in the country,” he remarked.
Challenges Hindering India’s AI Leadership
While India has produced some of the brightest minds in AI, experts note that the country still faces significant hurdles in leading the AI revolution globally. One major challenge is the lack of institutions that nurture homegrown AI talent. As a result, many Indian researchers migrate to countries like the United States and China, where they receive better opportunities and economic incentives.
“On one hand, Indians have been at the forefront of AI development. On the other hand, the U.S. and China are leading the game by a wide margin,” an industry expert pointed out. This disparity is largely attributed to inadequate institutional support and insufficient funding opportunities within India.
The Road Ahead for Indian AI Startups
Despite these challenges, India’s AI startup ecosystem is on an upward trajectory, with increasing investments and accelerator programs tailored to AI entrepreneurs. The efforts of initiatives like AI Studio, Lossfunk, and Upekkha reflect the growing momentum in AI development within the country.
As India continues to strengthen its AI ecosystem, experts believe that strategic investments, research-driven initiatives, and government support will be key to positioning Indian AI startups as global leaders. With more Y-Combinator-style accelerators emerging, the future looks promising for Indian AI entrepreneurs aiming to make a mark on the world stage.
Source: Swathi Moorthy, The Economic Times
