Boom in AI fuels a flurry of startups – Crypto News

Company registration data shows that 100-200 new AI-centric businesses take birth every month as tech entrepreneurs venture into health, agriculture, cloud, and robotics, powering the country’s robust service sector.

In April alone, 226 AI-focused businesses were incorporated, a jump from 86 a year earlier, data from the ministry of corporate affairs showed. That again was a big jump from a small base in the year before. Most of the new ventures in April were companies, while more than two dozen were limited liability partnerships (LLPs).

April surge

In the first three months of 2025, AI-focused business registrations steadily rose from 124 to 203, data showed. Many of these businesses feature ‘AI’ prominently in their names, as well as others like health, farm, cloud, robotics etc.

Experts say India’s combination of technology and software talent, moderating computing costs and innovation in solving social and business challenges are driving entrepreneurship in the AI space. Availability of free versions of large language models such as ChatGPT, wide usage of smartphones and low internet cost are aiding in AI’s wider use.

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India’s AI startup wave is being shaped by an emerging coalition of seasoned professionals and heavyweight investors, said Rohit Pandharkar, technology consulting partner,EYIndia.

Angel investors

“It’s no longer just venture capital firms like Lightspeed, Peak XV, and Pi Ventures writing early cheques, but ex-founders and product leaders from Flipkart, Freshworks and Google India are also stepping in as angel investors, validating ideas and syndicating deals upstream. Sarvam AI’s $41 million raise, backed by Lightspeed, Khosla Ventures, and Peak XV, is a case in point,” said Pandharkar, referring to the transaction announced in 2023.

Lightspeed Management Co., LLC on its website lists over 75 Indian companies it has invested in including Zepto, Razorpay and Sarvam AI, a generative AI start-up.

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“This blend of hands-on expertise and institutional capital is collapsing the funding cycle and helping technical founders commercialize faster,” Pandharkar said. “It’s a smarter model, and one that’s uniquely suited to India’s AI ambitions.”

Extensive adoption

AI is getting a boost given its extensive adoption by private and government sectors. The Income Tax Department and the Ministry of Corporate Affairs’ compliance filing portal MCA21 deploy AI and data analytics for ensuring greater compliance. Businesses are using AI-driven chatbots to track orders and tackle customer grievances, replacing humans. The Digi Yatra initiative of the civil aviation ministry which makes navigation in airports easier, also uses AI for passenger identification.

Generative AI is not just another technological cycle but a generational shift, N. Chandrasekaran, chairman of Tata Sons Ltd, wrote to shareholders of Tata Consultancy Services (TCS), India’s largest IT services company in its latest annual report. TCS is planning to create a large pool of AI agents to work alongside humans and deliver solutions.

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Meanwhile, the government has stepped up with the $1.25 billion IndiaAI Mission approved in March 2024, aiming to establish the nation as a global leader in the field. This comprehensive initiative rests on seven pillars, including building compute infrastructure, fostering future skills, financing startups, promoting innovation centres, creating data platforms, developing applications, and ensuring safe and trusted AI.

AI offers multiple entrepreneurship opportunities which include building applications or utilities and offering consulting services, said Kashyap Kompella, AI analyst and founder of tech consultancy RPA2AI, which has offices in Bangalore, London, Boston and in Washington DC.

“As Sam Altman, CEO of OpenAI has boldly articulated, AI may make it possible for a one-person company to become a billion-dollar unicorn. In that sense, AI offers great opportunities and growth potential. AI has certainly lowered the entry barrier for entrepreneurship by reducing the resource requirement for starting a business. However, competition in this sector is as intense as in the rest of the technology focused industries which will determine the success rate of businesses,” explained Kashyap Kompella.

But is a bubble forming?

Pandharkar of EY said the broader investment landscape shows rising capital flows and expanding interest across verticals and yet, there are signs of caution.

“Investors are shifting from hype to fundamentals. Rather than a clear bubble, the market appears to be in a maturation phase where investors are becoming more selective, focusing on companies with viable business models generating revenue and proven use cases than speculative AI applications,” he said.

“The divergence between the rapid growth in startup numbers and the more modest growth in funding suggests a market that is rationalizing even as it expands. Capital is plentiful but more selective than 2021 highs, so any correction in 2025-26 is likely to be a healthy deflation rather than a bubble burst,” said Pandharkar.

Multilingual India-specific large language models, public-sector adoption of AI, security analysis and software development assistance keep long-term value creation intact, he said.

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Company incorporation data broadly show that two out of three companies registered survive in the long-term.

AI has emerged as a core driver of India’s transformation as a global digital powerhouse, the Cellular Operators Association of India said in a report it brought out with KPMG last year.