How two Indian entrepreneurs set up a multimillion-dollar, AI-exclusive fund in Silicon Valley
One of the most interesting technology trends in the last few years has been the rise of artificial intelligence (AI) across sectors. From enterprises to startups, companies are taking to AI rapidly.
However, the trend hasn’t caught on in India as much as the global market. Not many Indian enterprises are investing in AI solutions, and Indian AI startups are also facing some difficulties in scaling up.
In the US, the scene is slightly different. Several businesses want AI solutions and are ready to pay startups to help them do so. Seeing a business opportunity, Amit Jain and Ankur Dinesh Garg set up IQAI VC, a multimillion-dollar fund for AI startups that will help these ventures connect with companies in the US that are looking for AI-based solutions.
"There are several startups in India that have great AI products but have a difficult time finding clients in India and often look at moving to the US," Ankur says.
IQAI VC funds AI startups and connects them to customers in the US. If a US company wants to acquire one of these startups, IQAI VC also facilitates this deal and helps the startups get a quick strategic exit.
The founders did not disclose the exact size of the fund but said that it invests around $100,000 in startups that have a scalable technology. Its portfolio includes Mirror.AI, Predickly, and SmatSuite.
"We want to be a startup platform where ideas can be groomed to become great businesses, and AI will remain our core focus," Amit says.
How it all started
Amit is the Founder of Z Nation Lab, an early-stage accelerator that brings together capital, technical expertise, networking, and investors for startups. IQAI VC is a SEBI-registered Category 1 AIF operating under the Z Nation Lab umbrella.
Amit first met Ankur met in early 2018 when Z Nation Lab had invested in the latter’s startup Hotify.
Ankur had co-founded Hotify, an AI-based cognitive intelligence platform, in early 2018 with Ramesh Kumar with offices in the US and India. The startup raised an angel round from Z Nation Lab. But the founders soon realised that while Indians were great at building tech, the country had no market for cognitive intelligence. And, Ankur moved to the US.
During a pitch meeting with SonaSoft, an IT services firm based in San Jose, the company offered to acquire Hotify, and Ankur and team agreed. "We realised we could scale our product faster with a US entity and for SonaSoft, we were the future of technology," Ankur recalls.
The deal was finalised in March 2019 and the co-founder continues to be part of SonaSoft. However, Ankur decided that he wanted to share his learnings of building and scaling an AI startup with the ecosystem. But, there was no platform for this endeavour and met Amit to discuss this.
Convinced by the viability of this idea, Amit and Ankur decided to launch IQAI VC in June, 2019.
"We found a model that works. There are enough engineer founders who don't want to be part of corporate hackathons anymore and want real deals to move to markets that pay them for their products,” Amit explains.
“These are the startups that we want to catch and bring to the US to meet clients and sell their product here," he adds.
The AI market
Corporate exits are the flavour of the season. Cisco acquired Chennai-based CloudCherry. OLX acquired Aasaan Jobs. Radware acquired ShieldSquare, and Reliance Industries took over Fynd.
And if this trend continues, given the rise of AI, IQAI VC wants to be in the thick of things, helping Indian founders land the best exits. The fund is competing with boutique funds like Arka Ventures, Emergent Ventures, and NuVentures that are also investing in AI.
The global business value derived from AI reached $1.2 trillion in 2018, an increase of 70 percent from 2017, says Gartner. In fact, AI-derived business value is forecast to reach $3.9 trillion in 2022.
"AI promises to be the most disruptive class of technologies during the next 10 years due to advances in computational power, volume, velocity and variety of data, as well as advances in deep neural networks (DNNs)," says John-David Lovelock, Research VP at Gartner.
"One of the biggest aggregate sources for AI-enhanced products and services acquired by enterprises between 2017 and 2022 will be niche solutions that address one need very well. Business executives will drive investment in these products, sourced from thousands of narrowly focused, specialist suppliers with specific AI-enhanced applications," he adds.
It is clear that IQAI VC is making the right bets. After all, these niche solutions are bound to come in from startups. To top it all, biggies like SoftBank and Alibaba are also investing in AI.
But the path is clear - the future is here with AI.
(Edited by Saheli Sen Gupta)