India's Generative AI Funding Recovers in Q2FY2025: Nasscom Tracker

The report highlights a 6X quarter-on-quarter (q-o-q) surge in investments, fuelled primarily by B2B platforms and productivity solutions. Funding activity gained significant momentum in Q2FY2025, with a record 20 funding rounds, marking a strong recovery after a sluggish Q1

Outlook Start-Up Desk

Updated on: 25 November 2024 3:38 pm

India has secured its position as the 6th largest global player in the Generative AI (GenAI) startup ecosystem, with notable advancements in innovation, funding, and talent. The country’s GenAI sector saw a significant boost in Q2FY2025, according to Nasscom's latest Generative AI Tracker.

Key startups like Nurix AI, Dashtoon, and Mihup are leading with innovative solutions in workflow management, digital comic creation, and conversational analytics. Q2FY2025 also witnessed a 6X surge in investments, driven by B2B platforms and productivity tools, with 20 funding rounds marking a strong recovery from Q1's slowdown.

Rebound Boosts Early-Stage Investments

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The report highlighted that the funding rebound was led by applications and services and it led to a total funding growth of 3.4X year-on-year, led by investments in enterprise applications and Agentic AI.

Funding rounds in India's GenAI sector tripled in Q2FY2025, with early-stage investments making up 77 per cent of the total, including angel and seed funding. Tech providers saw continued growth, shifting focus from building use case portfolios to converting proof-of-concepts (PoCs) into production-ready solutions. Partnerships surged 25 per cent quarter-on-quarter, focusing on product enhancements, joint go-to-market efforts, and government-led skilling initiatives.

As PoCs moved into production, the GenAI revenue pipeline strengthened, with better revenue realisations. Talent strategies evolved from basic AI literacy to advanced upskilling, highlighting platform integration and agentic AI. The Indian GenAI ecosystem is maturing, driven by stronger funding, higher revenue, and expanding enterprise and customer engagement applications.

Sangeeta Gupta, senior vice president and chief strategy officer at Nasscom, stated that the the generative AI landscape is evolving rapidly, reshaping technology service providers and unlocking new capabilities and future success will rely on strategic innovations, pilot project results, and lessons learned along the way.