TLDR: Nishit Garg, a partner at RTP Global’s Asia operations, reveals that early-stage investors in India are making substantial and riskier investments in quick commerce and consumer-focused AI tools. This trend persists despite a general decline in funding, driven by optimism in these sectors’ growth prospects. Recent investments include AI startups Trupeer AI and Kluisz.ai, highlighting a strategic focus on high-potential areas.
Early-stage investors in India are demonstrating a strong appetite for quick commerce and consumer-focused artificial intelligence (AI) tools, committing larger and riskier capital despite a prevailing slowdown in the overall funding landscape. This insight comes from Nishit Garg, a partner at RTP Global’s Asia operations, who notes a strategic shift towards securing greater ownership in these high-potential sectors.
According to Garg, investors are “diving in early—betting boldly, watching quietly, and waiting to see how the gamble plays out.” This approach underscores a deep-seated optimism in the long-term growth prospects of quick commerce and AI in the Indian market. RTP Global, for instance, is allocating a significant portion of its $1-billion global fund to India, with approximately one-third earmarked for the country. This translates to 25 to 30 investments over a 3-3.5 year period, typically at the seed or Series A stage, with cheque sizes ranging from $1-10 million.
AI is a particularly prominent area of interest. Globally, about 50% of RTP Global’s new deals are in AI, a figure that stands at 25-30% in India. Garg emphasizes that AI is not just a sector but an enabler across various industries, including climate, electric vehicles (EV), software-as-a-service (SaaS), and fintech. Recent investments by early-stage investors include AI startups like Trupeer AI and Kluisz.ai, indicating a direct focus on innovative AI solutions.
While the broader funding environment has seen a slowdown for about three years, there’s a recent pickup in Series B rounds. However, a vacuum persists for larger $200-500 million rounds, as major funds like SoftBank and Tiger Global have become less aggressive. Despite this, quick commerce and AI sectors continue to command higher valuations and attract substantial capital, sometimes leading to high burn rates due to the ample capital chasing them. Garg notes that AI valuations in India remain “much more reasonable” compared to the “crazy” valuations seen in the US, where seed deals can reach $50-60 million and Series A $150-200 million without significant business progress.
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The general funding slowdown has instilled a more cautious approach among funds. Investors are now scrutinizing companies for sustainable business models and the ability to survive potential delays in follow-on funding by managing costs. However, quick commerce and AI are often exceptions to this rule, given the high investor interest and capital availability.
