India’s AI Gold Rush: Startup Funding Soars 50% as Investors Bet Big on Targeted Applications

India’s artificial intelligence (AI) startup scene is heating up like never before. What was once a niche experiment for a handful of tech enthusiasts is now becoming a serious gold rush for founders and investors alike. With technology becoming cheaper, tools getting sharper, and a new wave of ambitious entrepreneurs stepping up, AI funding in India is surging — and it’s not just about hype anymore. It’s about building real, targeted applications that can scale globally.

In just the first seven months of this year, AI startups in India have raked in $665 million across 109 deals, according to data from Venture Intelligence. That’s a 46% jump compared to the $455 million raised in the same period last year, and already close to last year’s total of $735 million. Investors aren’t just writing more cheques; they’re writing bigger ones — the average deal size has grown from $4.9 million to $6.1 million, up 24% year-on-year.

From Big Models to Big Applications

“If 2023–2024 was the year of large language models, 2024–2025 is the year of applications built on top of them,” said Naman Lahoty, Partner at Stellaris Venture Partners. Lahoty believes India is in a sweet spot: the infrastructure has improved nearly tenfold in the last two years, and the country’s strength lies in building scalable applications, whether for enterprise use or mass-market consumers.

Stellaris has already backed AI ventures across diverse use cases — from Goodscore (credit scoring) and Dashverse (AI-native entertainment) to Carpl (healthcare diagnostics), Orbitshift (sales intelligence), Drizz (mobile app testing) and Kombai (frontend UI development).

The Investor Rush

The numbers reflect a broader shift in investor appetite. Global and domestic venture firms — including Accel, Prosus, Stellaris, and Vertex Ventures — are aggressively scouting AI opportunities.

This year alone, funding has flowed into startups like Vaya (AI astrology), August AI (healthcare guidance), Arivihan (learning), HostedAI (GPU management), Hakimo AI (security), and Pivot AI. Others, like Composio, Beacon.li, MaxIQ, Frinks AI, Phot.AI, and RapidClaims, have also secured capital to scale their innovations.

What’s driving this? Industry watchers point to dramatic improvements in AI infrastructure — from deeper reasoning and coherent long-form conversations to realistic video generation — coupled with falling inference costs. This has lowered the entry barrier for founders, expanded the investor pool, and enabled quicker time-to-market.

Deeptech Leads the Pack

When it comes to where the money’s going, deeptech is clearly leading the charge. This sub-sector has attracted $349 million across 40 deals in 2025 so far, followed by generative AI ($148 million across 18 deals) and computer vision ($103 million across seven deals).

Vishesh Rajaram, managing partner at Speciale Invest, believes this deeptech boom is more than just a trend. “We’re seeing more deeptech startups emerge now than before. The success of companies like Agnikul, ePlane, and Skydo has proven that building deeptech from India is possible, inspiring more founders to take the leap,” he said. Speciale has even launched a ₹600-crore fund dedicated to India’s deeptech and sovereign-tech ambitions — a sign of both necessity and opportunity in the space.

Interestingly, while investor confidence in India’s AI startups is high, many founders are moving — at least temporarily — to the US. The reason? Proximity to customers, talent, and emerging market trends. Big names making the shift include Arvind Parthiban (SuperOps), Vijay Rayapati (Atomicwork), Soham Ganatra (Composio), Vignesh Girishankar (RocketLane), Siva Rajamani (Everstage), and Vengat Krishnaraj (Klenty).

While such moves can accelerate growth for these startups, there’s an underlying concern: the outflow of top talent could slow India’s domestic AI innovation and reduce the pool of homegrown solutions.

Despite this, industry leaders remain optimistic. Sameer Dhanrajani, CEO of AIQRATE and 3AI, says India’s AI journey is just beginning: “The democratisation of AI and the ability of enterprises to unlock its potential are huge drivers for AI-focused startups. The momentum will sustain for years to come.”

If current trends continue, 2025 could be a record-breaking year — not just in terms of funding numbers, but in cementing India’s role as a global AI powerhouse. With a growing base of specialised talent, strong application-driven innovation, and an increasingly supportive investment environment, India’s AI story is shaping up to be one of the defining narratives in the global tech ecosystem.