AI Startup Funding & Acquisition Report 2023

Indian AI startups raised a funding of $ 1.11 Billion across 47 funding rounds—this is a marginal increase of 0.1% compared to the previous year.
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Artificial Intelligence is no longer a fringe technology in India. Rapid digitalisation in various industries such as banking, financial services and insurance (BFSI), telecommunication, healthcare and automotive have raised a demand for AI-integrated systems. This has fuelled the growth of startups providing AI and related services across different sectors to solve business challenges.

With the increasing adoption of AI and related technologies, the funding of enterprises providing such services has seen an uptick over the years. However, in 2022, there has been only a marginal increase in funding for AI startups. Funding has increased marginally from $1,108 Million in 2021 to $1,109.62 Million in 2022. Moreover, funding rounds have decreased sharply from 135 in 2021 to 47 in 2022.

The report traces how funding in Indian AI startups varies across months, stages (for example, early-stage and late-stage), industries and cities.

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The report also covers the acquisition deals in Indian AI startups that happened in the year 2022. With fewer funding rounds in 2022, larger AI enterprises and startups are looking for mergers and acquisitions to diversify into newer domains.

Since the pandemic began, companies have shifted to a remote work model necessitating the need to automate different business processes. AI has been a key technology driving automation. Consequently, several enterprises have shown interest in acquiring AI-based startups. In 2022, 32 AI startups were acquired by big enterprises, unicorns and soonicorns.

Key Highlights


  • Indian AI startups raised a funding of $ 1.11 Billion across 47 funding rounds—this is a marginal increase of 0.1% compared to the previous year.
  • 17% of the companies that received funding in 2022, offer conversational AI solutions/services.
  • Late stage funding made up for 21% of the total number of rounds while making 59% of the value raised.
  • Seed-stage deals made up 15 out of total 47 funding deals in the year 2022. However, they raised only $39.23 Million, 36% of the total funding value.
  • Uniphore, a global conversational AI technology company, received the highest funding of $400 Million in 2022 through a Series E round.
  • Bengaluru-based AI startups received 63% of the total funds invested in AI startups in 2022.


  • Among the notable acquistions, E-commerce logistics SaaS company Shiprocket acquired a majority stake (80%) in Pickrr for $200 million.
  • 13% of the AI start-ups that got acquired in 2022 provide conversational AI products/services.
  • The average estimate revenue size of the companies acquired in the year 2022 is $6 Million across different sectors and industries.


AI Startup Funding


AI startups in India across different sectors received USD 1,109 million in total funding in 2022.


In 2022, Indian AI startups received funds across 47 funding rounds.


There was a 65% decrease in the number of funding rounds in 2022 compared to the previous year.

In the year 2021, the Indian AI ecosystem, for the very time, crossed the $1 billion mark at a growth rate of almost 33% from the year 2020. According to the previous reports published by AIM Research, AI startups have seen constant growth in funding, from $75 Million in 2014 to $1109.6 Million in 2022.

In 2022, there were a lot of talks that funding would decrease because of the soaring inflation and layoffs across the sectors. But the funding for AI startups in 2022 remained the same showing a slight increase of 0.1 % in the funding value compared to 2021.

Despite the lower number of rounds, almost same value of money was raised. If 2021 was a banner year for funding, 2022 was when startups started conserving cash and focusing more on survival rather than raising money. With the aim to reduce the cash burn rate and place bets on startups with an already-proven track record, VCs participated more in the later stages of funding rounds in terms of amount invested.

There has been a 65% decrease in the number of funding rounds in 2022. As a result, the average ticket size of the funding deals across different rounds increased from $8.3 Million in 2021 to $23.6 Million in 2022.

A sharp decline in the number of funding rounds can be attributed to the rising interest rates and fear of global recession that have made investors more risk-averse. This has led to a slowdown of funding momentum in Indian AI startup ecosystems.

What technologies did VCs fund?


17% of the AI startups that received funding in 2022, offer conversation AI solutions/services.


Start-ups working in Computer Vision were also in high demand as 15% of the AI startups funded this year work in that area.

Organisations working in LLM and Conversational AI are in high demand as all VCs look to jump on the bandwagon. This is either because companies genuinely do see potential or they have a fear of missing out.

Early Stage vs Late Stage Funding


The share of the total funding of AI startups by value for late-stage funding increased by 8pp from 2020 to 2022.


Share of the number of late-stage funding rounds of AI startups increased by 14pp from 2020 to 2022.


Late-stage funding made up 21% of the total number of rounds while making 59% of the total money raised for AI startups in India.

As the year 2022 was filled with uncertainties regarding the global recession, investors looked for AI startups that were already in the later stages of development.

However, excluding the funding of $400 Million received by Uniphore through series E (late-stage funding), the early-stage funding for Indian AI startups was higher than late-stage funding for the year 2022.

This is primarily because early-stage funding is an attractive proposition for VCs. As investment in early-stage startups is a safe choice since most late/growth-stage startups tend to burn cash with no profit in the picture.

Another reason for the growth in early-stage investments is the scope for higher returns as investors can take the equity at a lower valuation and then exit during the growth stage.

AI Startup Funding Across Types

$400 Million

Investment made under the series E funding was the highest in 2022, with $400 million funding received by Uniphore.

$256 Million

In terms of amount, funding made through series B was the second highest, with $256 million in 2022.


There were 15 seed funding rounds in 2022, the highest compared to other funding series.

Seed-stage deals were robust in terms of number, with 15 out of the total 47 funding deals recorded in the year 2022. However, the total seed funding came to be only $39.23 Million, 36% of the total funding value.

The volatile global market with fears of recession looming large is pushing investors to turn towards established startups which have passed the development stage of investing.

In 2022, according to data collated by AIM research, series B funding came second in terms of value and proportion, implying that the funds have been invested in credible ventures with a dedicated user base and revenue stream and are now looking to improve infrastructure market reach, market share and human resources.

Top Funded AI Startups

$400 million

Uniphore, a global conversational AI technology company, received the highest funding of $400 Million.

$76 million

Darwinbox is an AI-powered cloud-based Human Resources Management Software (HRMS) that raised $76 million through series-D funding.

Top Investors investing in AI startups

AI Startup Funding Across Months


The AI startup funding was the highest in February, totalling $434 Million.


In the month of September, AI startups received funding amounting to $ 155 million.


Nine funding rounds took place in the month of February, the highest in 2022.

Q1 of the calendar year 2022 saw the highest funding in terms of value and number of rounds due to the impetus provided by the funding in 2021. The month of February saw the highest number of funding rounds, nine with investment amounts totalling $434 Million.

However, there was a sharp decline in funding after the month of February, going as low as two funding rounds in the month of August that raised just $1.5 million. With tech industry stock prices plunging, the valuation of tech startups plummeted, and investments dried up as the year progressed.

City-wise Distribution of Funding


Bengaluru-based AI startups received a total of 23 funding in the year 2022.


Bengaluru-based AI startups received 63% of the total funds invested in AI startups in 2022.

Being a dominant player in the Indian startup ecosystem, Bengaluru has become a haven for startups. The presence of a large number of venture capitalists and angel investors provides the necessary funds aspiring entrepreneurs need to materialise their tech-driven innovative ideas.

AI Startup Acquisition

Major Acquisition Deals

Revenue of Acquired Companies

$6 Mn

The average estimated revenue size of the companies acquired in the year 2022 is $6 Million across different sectors and industries.

$202 Mn

The aggregate estimated revenue of the acquired companies in 2022 was $202 Million across different sectors and domains.

As the value of most of the acquisition deals was undisclosed, we calculated the estimated revenue of AI startups acquired in 2022.

Firms, whether startups or industry stalwarts, seek to acquire smaller AI companies to grow and position themselves across different markets. With acquisitions, companies are also able to build comprehensive AI-enabled product suites, which enable them to diversify and expand their businesses.

The Covid-19 pandemic nudged companies to shift to remote work model, and as a result, they needed to automate different business processes by deploying AI in their daily operations. Consequently, companies are looking for startups with AI capabilities to fill gaps in their products and services to reach more customers.

Skilled tech workers are another key attraction for acquirers amid a shortage of advanced AI engineers and developers.

Percentage of Acquisition by Technology


13% of the AI start-ups that got acquired in 2022 provide conversational AI products/services.


9% of the acquiree companies offer robotic products and solutions to their clients across industries.

Start-ups offering conversational AI have become the center of attraction for companies looking for acquisitions. Conversational AI not only can help solve customer support issues but it can also assist in making and modifying sales.

Headquarter location of the companies acquired


Out of 32 AI startups that got acquired in 2022, 9 were housed in Bengaluru, the highest for the year.


6 AI startups that got acquired were based out of Mumbai.

Most of the AI startup companies that got acquired were based in Bengaluru, given the presence of a high number of startups. The startup ecosystem in Bengaluru is vibrant characterised by the presence of venture capital firms, angel investors, incubators and accelerators. Added to these is the tech talent that is not only plenty but also experienced. These factors make Bengaluru the favourite destination for acquirer companies.

Bengaluru is closely followed by Mumbai. The cosmopolitan city is thriving with financial, healthcare and creative industry professionals. Moreover, the easy access to capital with central administrative offices of banks and financial institutions makes Mumbai-based startups the prime focus for acquisitions.

Read the complete report here:

Siddharth Raghuvanshi
Siddharth works as a research analyst at AIM. He has worked in the Market Research industry for more than 4 years and has primarily worked in AI/ML related field.A theatre enthusiast, his love for writing and data has brought him here.

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