GenAI startups see 3.4x funding surge in September quarter: Nasscom

In Q2 FY24, the total funds raised stood at $15 million across nine rounds, driven primarily by enterprise applications and Agentic AI

India is emerging as a key player in the global generative artificial intelligence (GenAI) ecosystem, now ranked sixth, behind the US, which leads the global chart among major economies for its startup ecosystem in this space. Other regions ahead of India include the UK, Japan, Israel, and the European Union.

 

Nasscom’s GenAI Tracker: Tech Industry Activity report highlights major growth in funding, with the second quarter (Q2) of 2024-25 (FY25) recording 20 funding rounds, marking a sharp recovery after a sluggish first quarter/Q1 ($8 million).

 

In Q2FY25, GenAI funding surged to $51 million, a nearly sixfold increase from $8 million in Q1, according to the report.

 

 

Total funding also grew 3.4x year-on-year. In Q2 of 2023-24, the total funds raised were $15 million over nine rounds, driven primarily by enterprise applications and agentic AI.

 

More than 90 per cent of Q2FY25 funding was concentrated in three startups — Nurix AI, Dashtoon, and Mihup. Early-stage investments accounted for 77 per cent of the funding rounds, including angel and seed funding. However, individual funding rounds remained below $12.5 million for seed-stage and $15 million for Series A, largely due to the absence of major model investments such as Krutrim and Sarvam, which dominated the previous two quarters.

 

Sangeeta Gupta, senior vice-president and chief strategy officer at Nasscom, said, “Providers are re-evaluating strategies and increasing investments in technology and talent. Future success will rely on strategic innovations, pilot project results, and lessons learned along the way.”

 

The report also explored how the tech industry is advancing its GenAI efforts. After considerable activity in building use case portfolios, product integrations, and GenAI platforms, providers are now focused on converting active proof of concepts into production.

 

This shift is reflected in a rise in partnerships, with 25 per cent more partnership-related activity reported in this quarter compared to Q1. These partnerships focus on enhancing product capabilities, joint go-to-market strategies, global AI alliances, government-led skilling initiatives, and expanding GenAI platform offerings.

 

Some of these partnerships include Accenture and Unilever, where the latter is adopting GenAI to drive efficiency and improve business agility. Similarly, Genpact’s partnership with Volkswagen Financial Services, among others.

 

The GenAI revenue pipeline among information technology services is also strengthening. Accenture has indicated that it has booked $3 billion and realised around $1 billion, while Tata Consultancy Services has secured $1.5 billion in bookings, according to the report.