How AI startups are capturing global investors attention

COVID-19 has undeniably led to radical long-standing changes in the Indian startup and investor ecosystems. At the outset of the unprecedented crisis, investments in the startup sector slowed down significantly, although they never came to a halt.

Amid the changing dynamics of the industry, investors once again began backing startups. Within the first eight months of 2021, Indian startups raised a massive $26 billion, with several of them foraying into the unicorn club and going public.

Taking a closer look at the statistics, one can discern a particular category that has increasingly attracted investors over the years, especially since the onset of COVID-19, AI (Artificial Intelligence) startups.

The AI frenzy

AI has been a game-changer for the world in almost all aspects. In fact, AI has been the cornerstone for several businesses — both enterprises and startups. Since the pandemic began and the world shifted to a remote working model, AI, IoT, and Big Data have been instrumental in enabling business continuity, helping companies sail through the crisis, recover, and thrive.

Given AI’s pivotal role in helping businesses revive post the pandemic and subsequent lockdown’s impact, it is no surprise that AI-driven startups are some of the most favoured by investors.

Indian AI startups attracted total funding of over $836 billion in 2020 — the largest funding amount in the last seven years — at a 9.7 percent year-on-year growth. The same year, the number of AI startups that received funding doubled from 2019, signalling the rise of India’s tech startups.

Today, AI has made its way into nearly every aspect of our lives — be it navigation, smart living, travel, or education and finance. This rapid takeover by AI is, in reality, just the beginning. And AI startups are here to establish this by building previously unthinkable solutions for real-world problems, attracting large-scale investor attention.

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Sector-wise AI startups

Having accelerated technological progress, the pandemic has indisputably forced businesses across verticals to adopt cutting-edge technology to avoid becoming redundant.

Sectors that were previously slow-adopters, such as agriculture and real estate, have swiftly integrated AI into their operations, capturing investors’ attention and securing funding.

Despite the technological innovation, Indian startups have barely scratched the surface in terms of AI adoption. AI holds a wealth of potential, and there is still an excellent scope in the market for more startups to learn to build a disruptive business model and garner capital.

Global backing

COVID-19 changed the dynamics of the investor community and the startup ecosystem. Today, Indian startups are not only witnessing the emergence of the new-age, younger generation of investors emerging but also investors from across the world.

Globally, investments are flowing into Indian startups as more and more investors identify the high growth potential, innovative solutions, and usage of cutting-edge technologies such as AI, ML, IoT, Data Analytics, etc., of the country’s startups.

The road ahead

As per NASSCOM, AI and data will be contributing a colossal $500 billion to India’s GDP — nearly 10 percent of the country’s ambitious target of becoming a $5 trillion economy.

Given its skyrocketing adoption and growth, there is no doubt that the future of AI in India’s fast-growing startup ecosystem shines bright, and the investor attention on AI startups will only grow stronger.