Antler India's 40% Investment Will Be Around AI in 2024: Rajiv Srivatsa The partner at Antler India advises AI startup founders to steer clear of the hammer-looking-for-a-nail approach. He also hints at Antler's aim to back over 6,000 early-stage startups by 2030

Just a day after India annulled its fourth and final phase of lockdown on May 31, 2020, Singapore-based Venture Capital (VC) fund Antler announced it was entering the Indian market with its Day Zero investing model. Taking an audacious move amid the healthcare crises, Magnus Grimeland, founder and CEO, Antler said he believed the ecosystem had massive potential.

With Rajiv Srivatsa (of Urban Ladder) at the helm of affairs, the roadmap for the next four years included investing in 150 startups. Later, Antler India onboarded Nitin Sharma as a partner and co-leader for all India efforts.

In September 2023, Antler India launched its maiden fund of USD 75 million (~INR 600 crores) to focus on early-stage companies. An India-focused and separate from the global Antler entity, the fund has backed 62 startups and 122 founders, achieving a 40 per cent target of its goal of 150.

The Residency, running its fifth edition, focuses on co-founder matching, deep business model validation, initial capital, expansion support, and follow-on funding. So, what makes two prospective founders click? "We run a set of interventions and activities designed to forge meaningful connections and collaborations between. Ultimately, the goal is to help find the ideal co-founder, a long-term and enduring partnership. We stress-test the co-founder's relationship, emphasizing the common value match. For most tech startups, we recommend an equal partnership between the business co-founder and the tech co-founder," says Rajiv Srivatsa, partner, Antler India.

Betting big on AI

Last year, the world saw a boom when it came to artificial intelligence startups, globally and in India. According to Crunchbase, AI startups worldwide raised USD 50 billion in 2023, up from USD 45.8 billion in 2022. Earlier, Srivatsa termed 2023 as a hype cycle for AI and expected filtering this year. Has Antler India's thesis for AI startup funding changed? "Last year the ecosystem saw many founders building single-feature wrapper apps without much clarity on the larger vision or sustainable differentiation. This year we've started seeing founders think more deeply about moats. The biggest issue with current B2C Gen AI apps is poor margins and retention as they rely on similar underlying models and haven't discovered obvious network effects, or workflows that are hard for competitors to duplicate."

This year, Antler India aims to have 30-40 per cent of its ~30 investments in AI. AI bets made by the Indian arm include Plotch.ai, Figr, Segwise, and Kusho.

He hints that founders are now going after harder problem statements, vertically integrated apps, and leveraging deep personalization using AI to create an edge with data. "We are also seeing interesting plays in reimagining SaaS workflows with AI-nativity and enterprise-grade software built for reliability, predictability, and quality assurance. AI tooling and infra is another critical and huge market that is ripe for founders to build," he adds.

The partner and VC are optimistic about new copilots, middleware, and developer tooling ventures built in India for the global market but also areas such as industry-specific agents, Indic (local language) LLMs, and completely new ways of engaging Indian consumers in education or agritech. Another angle will be how India's SaaS and IT services industries adapt to an AI-first world.

He strongly advises AI startup founders to steer away from the hammer-looking-for-a-nail approach. Everything does not need AI. Rather, it is important to identify actual end-user needs and unserved products/markets. "AI products that focus too much on AI and not enough on customers and market size are essentially hammers looking for nails. They might be cool at first but soon lose traction as similar products emerge or when consumers get used to the AI models," he concludes.

He also hints at Antler's aim to back over 6,000 early-stage startups by 2030.