NewKerala.com

AI Funding Soars: 12% of India's VC Pie Now Goes to Artificial Intelligence

Investments in Artificial Intelligence are accelerating rapidly in India, with AI's share of total venture capital funding rising to about 12% from under 5% in 2020. In 2025 alone, AI companies attracted 188 investments worth $1.2 billion, marking a 58% annual increase in funding value. The broader deep tech sector, which includes space tech and semiconductors, now represents around 15% of total private equity and venture capital activity. This surge reflects a fundamental investor shift from consumer-led growth to innovation driven by science and intellectual property.

Key Points: AI VC Funding in India Hits 12%, Up From 5% in 2020

  • AI share of VC funding hits 12%
  • $1.2B invested in AI firms in 2025
  • Deep tech now 15% of PE/VC activity
  • Early-stage deep tech investments double in 5 years
2 min read

AI investments surging in India; AI share in venture capital funding rises to 12% from 5% in 2020: Report

AI's share of venture capital funding in India surged to 12% in 2025 from under 5% in 2020, with $1.2B invested, a new report reveals.

"AI now accounts for about 12 per cent of total VC funding, up from under 5 per cent in 2020, representing significant growth. - India Deep Tech Alliance Report"

New Delhi, February 23

Investments in Artificial Intelligence and deep tech sectors are gaining strong momentum in India, with AI's share in Venture Capital funding rising to about 12 per cent from under 5 per cent in 2020, according to a report by India Deep Tech Alliance.

The report highlighted that AI startups emerged as the standout theme in 2025, reflecting growing investor confidence in technology-led innovation and real-world applications across sectors.

In 2025 alone, AI companies attracted 188 investments worth USD 1.2 billion, marking a 58 per cent year-on-year increase in funding value. The report noted that this surge reflects rising adoption of AI across enterprise software, healthcare, financial services, cybersecurity, and industrial applications.

It stated "AI now accounts for about 12 per cent of total VC funding, up from under 5 per cent in 2020, representing significant growth. Looking more broadly, deep tech investment has reached critical mass".

The report also highlighted that deep tech investment in India has reached critical mass over the years. Since 2016, nearly USD 28 billion has been invested across more than 2,100 deep tech deals. Deep tech now represents around 15 per cent of total private equity and venture capital activity, compared to just 4 per cent a decade ago.

The report noted that even as overall venture capital activity moderated in 2025, investment momentum remained strong in technology-led sectors. Total VC investment in India remained steady at about USD 10 billion in 2025, but within that, AI and deep tech sectors sharply outperformed, indicating a shift in investor priorities.

This trend reflects a fundamental shift from consumer-led growth to science, engineering, and intellectual property-driven innovation.

The report also highlighted strong diversification within the deep tech sector. While AI continues to dominate, significant momentum is also visible in space technologies, semiconductors, robotics, advanced manufacturing, med tech, energy, and climate technologies.

Encouragingly, early-stage deep tech investments have more than doubled over the past five years, indicating a growing pipeline of future technology leaders and sustained investor interest in innovation-driven sectors.

'India Deep Tech Alliance' is an industry-led consortium of leading Indian and Global Investors who have come together to accelerate deep-tech entrepreneurship in India and align with national innovation priorities.

- ANI

Share this article:

Reader Comments

P
Priya S
While the growth is impressive, I hope this investment translates into real-world impact and jobs here, not just exits for foreign VCs. We need to ensure the IP stays in India and builds our own tech giants.
R
Rohit P
$1.2 billion in one year for AI startups! The shift from consumer apps to deep tech is what will make India a true knowledge economy. Excited to see what comes out of the space tech and semiconductor sectors mentioned.
S
Sarah B
Working in Bangalore's tech scene, I can feel this momentum. The quality of AI startups has improved dramatically. But the report is right - we need sustained early-stage funding to build a pipeline, not just chase later-stage unicorns.
V
Vikram M
Good step, but let's not get carried away. 12% is still small. Most funding still goes to e-commerce and fintech. True test will be if we can produce world-class AI products, not just services. The focus on engineering and IP is key.
K
Kavya N
As a student in computer science, this is very encouraging! 🚀 More opportunities in cutting-edge fields instead of just coding for others. Hope the growth in robotics and med tech continues. The future looks bright for tech careers in India.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50