India can build serious AI with less capital than frontier labs: Peak XV’s Ravishankar

Speaking at the Mint India Investment Summit, Ravishankar said India’s AI opportunity lies less in outspending global leaders and more in building useful products quickly and cost-effectively at scale, leveraging the country’s deep engineering talent.

He outlined two broader areas where Indian startups can still create large businesses, even if the country is not yet at the cutting edge of global AI development.

The first opportunity, he said, is that India will be a quick adopter of AI across large, everyday use cases. As AI tools improve, many familiar consumer and service categories could be reimagined from the ground up, he said.

“India will be a fast follower and a quick consumer of AI in areas such as customer support, citizen services, travel and jobs, where new companies are beginning to rebuild internet products with AI at the centre,” Ravishankar said.

The second opportunity lies in the layers around AI itself: infrastructure, software and tools that help other companies build and use AI products.

Ravishankar said Indian teams are well-placed because of the country’s large developer base and growing technical talent pool. Many of these companies are being built through cross-border models, with engineering teams in India and customer-facing operations in the US, he added.

In India, Peak XV has been among the active investors in Indian AI startups, alongside Lightspeed, Khosla Ventures, Accel, Elevation Capital and pi Ventures, as funds back companies across model-building, applications, voice AI, developer tools and AI infrastructure.

That momentum has carried into 2026 with a string of large AI bets. In February, Neysa, an Indian AI acceleration and cloud provider, announced a $1.2 billion capital raise led by Blackstone. The deal valued Neysa at about $1.4 billion.

Sarvam AI, another closely watched company and an existing Peak XV portfolio firm, is meanwhile in early talks to raise $250-300 million at a valuation of about $1.2 billion.

“Startups that originally were targeting to raise $20 million or $30 million ended up raising $50 million or $100 million sometimes in the funding boom year,” he said. But when markets turned in 2022, boards pushed founders to conserve cash and focus on profitability instead of chasing fresh capital at lower valuations.

The funding data broadly reflects that reset. Late-stage startup funding in India fell to $5.5 billion in 2025, down from $7.5 billion in 2024, $6 billion in 2023, $15.6 billion in 2022 and $29.3 billion in 2021, according to Tracxn.

Even compared with 2020, before the funding boom peaked, late-stage funding last year remained lower. Ravishankar said activity began to revive only in 2024 and more clearly in 2025, helped in part by companies repositioning themselves as AI-first businesses.

On valuations, Ravishankar said the excess has not fully disappeared so much as moved into AI. More broadly, he argued that Indian startups have historically commanded richer valuations because many businesses are more capital-efficient than their global peers and because investors are pricing in years of future growth.

But he also cautioned against treating every highly valued company as equally deserving of that premium. “Valuations in India have never been cheap. A rising tide lifts many boats. So not everybody who has a high valuation is worth it,” Ravishankar said.

“Being in the most important companies matters,” he said, adding that the firm can still do well even if it pays a somewhat higher price at entry.

He was also cautious on exits, saying initial public offering (IPO) windows open and shut with market cycles, rather than on a fixed schedule. “Weak sentiment since around November-December and concerns over geopolitics, oil and inflation could weigh on new listings in the near term,” he added.

Ravishankar’s comments come at a time when the ongoing West Asia war has added to market uncertainty and slowed the momentum for some startup IPO plans and draft filings.

Peak XV companies have accounted for a chunk of India’s venture-backed IPO market in the past five or six years, including names such as Groww, PineLabs, Meesho, and many others.

In February, Peak XV closed its first independent $1.3 billion fund since the Sequoia split, spanning India Seed, India Venture and APAC vehicles. Peak XV was created in June 2023, when Sequoia Capital split its US-Europe, China, and India-Southeast Asia businesses into separate independent firms, with Sequoia India and Southeast Asia rebranding as Peak XV Partners.

The fund closure came amid another round of senior exits, including managing directors Ashish Agrawal, Ishaan Mittal and Tejeshwi Sharma, after several other senior departures over the past year, as former Peak XV leaders increasingly spin out to start their own firms.