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Even as the global AI scenario starts to resemble a true warzone, Indian artificial intelligence players may have set themselves up for a below-par show by continuing to function in peacetime mode, two venture capital insiders have cautioned.
Despite a surge in technically skilled founders in the Indian artificial intelligence sector, concerns are growing about the country's startups falling behind their global counterparts. Shekhar Kirani and Prayank Swaroop from venture capital firm Accel have raised alarms over the cautious approach many Indian AI companies are adopting, , The Times of India reported on June 5.
During a recent media roundtable, they emphasised that a lack of urgency and a limited global vision are hindering progress in this rapidly evolving industry, the report (by Supriya Roy) said.
Caution versus competition
Kirani pointed out a stark contrast in operational mindset between Indian and US-based AI startups. “In the Valley, it's a warzone. Engineers are building, iterating, raising money, and chasing scale aggressively,” ToI quoted him as saying.In stark contrast, many Indian founders seem to be operating in "peacetime mode," focusing on capital efficiency instead of pursuing rapid growth, he observed.
According to him, this cautious approach may not hold up in the competitive AI landscape, where speed and scalability are paramount.
Valuation disparities: A clear divide
The differences between Indian and US AI startups are also reflected in their valuations.Kirani noted that US AI-first startups can achieve valuations exceeding $500 million with $15 million in annual recurring revenue (ARR), while traditional software-as-a-service (SaaS) companies with similar figures typically see valuations around $100 million.
“The market rewards velocity. If you're an AI-native company growing fast, the delta in pull and valuation is unprecedented,” he remarked.
Investor expectations: Changing scenario
Swaroop highlighted a shift in how investors assess potential in the AI sector. “Everyone's looking for that breakout moment,” he said.He explained that the threshold for what is deemed an early-stage company has risen. Previously, businesses with $1-2 million ARR were considered early stage, but now, AI-first companies are expected to reach $50-100 million in revenue within 12-18 months if they are growing rapidly.
“The bar is higher, but so is the upside, if the founder is thinking globally,” he added.
India AI scene: The road ahead
As the Indian AI landscape matures, it is essential for startups to adopt a more aggressive approach. Embracing a global vision and prioritising rapid growth could be key to competing with their counterparts in the US.The call for a shift in mindset is clear: to thrive in the AI sector, Indian startups must act decisively and innovate swiftly.
