<\/p>\n
Four startups\u2013Bengaluru-based Sarvam and Gnani.ai, Gurugram\u2019s Soket AI Labs, and Noida\u2019s Gan AI\u2013have been shortlisted by New Delhi to use government-licensed GPUs.\u00a0<\/p>\n
The proposed move, which signals a shift from a purely subsidy-driven approach to one that seeks the Indian government\u2019s long-term participation in the country’s AI ecosystem, has sparked debate among founders and investors. While startup founders are happy with the assurance that comes with the government\u2019s skin in the game, investors raised concerns about conflict of interest.\u00a0<\/p>\n
A senior government official told\u00a0Mint<\/i>, requesting anonymity, that taking equity in the startups \u201cis one of the many methods through which the government is considering rolling out the GPU access”. The ministry is currently in process of vetting these methods, and a final decision on how the funding will take place may be announced in the coming months.<\/p>\n
\u201cAn equity stake model does not have to only be through sovereign funds\u2014under National Quantum Mission, too, startup funding is being offered in exchange for equity stakes,” the official said.\u00a0<\/p>\n
Also read | Sovereign silicon: India targets indigenous 2nm, Nvidia-level GPU by 2030<\/a><\/p>\n To be sure, the government earlier this year announced the $1.2-billion AI Mission to offer a subsidized approach to access to GPUs, which are the lifeblood of AI firms. Reason: buying GPUs is expensive\u2013Nvidia\u2019s chips cost up to $60,000 for a single GPU system\u2013and beyond the capabilities of India\u2019s fledgling AI startups.\u00a0<\/p>\n So, the government has roped in Hiranandani Group\u2019s Yotta Data Services, Tata Communications and others to offer access to GPUs at their data centres at about one-fourth of the market rate, or as low as $0.8 per GPU per hour.<\/p>\n Mint\u2019s\u00a0<\/i>email to Meity seeking comment from an official spokesperson did not receive responses until press time.<\/p>\n Some investors feel the government\u2019s move may create a conflict with both private investors as well as taxpayers. Harshjit Sethi, managing director of venture capital firm Peak XV, said that as a result of the Centre\u2019s equity stake in these startups, \u201cthe return to the taxpayer will come from the appreciation of this equity stake, in addition to the strategic imperative that we as India should have our own AI models from scratch”. Peak XV led Sarvam\u2019s seed funding round, and co-led its $41-million series-A funding round in December 2023.<\/p>\n Such a move could create conflict for private investors, who seek profitability in exchange for large-scale investments. Three other VC partners investing in deep-tech startups told\u00a0Mint\u00a0<\/i>that such a move may raise questions of conflict, at least in the near-term.<\/p>\n Read this | Home-made chips: India’s GPUs set for year-end trials<\/a><\/p>\n \u201cIt\u2019s important that the government’s involvement is structured in a way that doesn\u2019t limit startups\u2019 ability to pursue global commercial opportunities,” said Vishesh Rajaram, managing partner of early-stage deep-tech-only VC fund Speciale Invest. However, Rajaram added that \u201cif done right, the government can play the role of a catalytic capital provider\u2014nudging innovation towards public good”.<\/p>\n \u201cThe question would then be, should you seek to raise a large funding round and pursue a venture that gives you closer control of the venture, or do you build for public equities and scale up your business after that?” a senior industry executive and investor at an early-stage tech-focused VC fund said. \u201cThis is a question that will need to be answered by the founders, in order to judge if a government-owned stake could raise conflicts.”\u00a0<\/p>\n For others, though, the decision is to favour access to these pricey GPUs rather than protecting their stakes.<\/p>\n Abhishek Upperwal, founder and chief executive of Soket AI Labs, said that the startup is leaning towards offering an equity stake to the Centre for access to 2,000 GPUs to train its 120-billion-parameter large language model (LLM). \u201cThe rationale is that if the government is a stakeholder in the business, this allows us to reduce our dependence on venture capital funding\u2014since in exchange for a minority stake, we\u2019re getting to reduce our operating costs significantly.”<\/p>\n However, this could come at the cost of focusing on public utilities, rather than a commercial business model in the near term. \u201cThe government owning a stake is to largely ensure that public funds are used to train AI models for public utilities\u2014here, the Centre will play the role of a mentor, and not a client,” Upperwal said.<\/p>\nOpinions divided<\/h2>\n