Rahul Agarwalla, Managing Partner at SenseAI, commented, “AI SaaS firms are already trading at 2X the multiple of a non-AI SaaS company. AI-first companies are scaling faster than ever before
India’s artificial intelligence (AI) startup ecosystem is experiencing significant growth, largely driven by the rapid adoption of AI-powered software-as-a-service (SaaS) solutions, a new report revealed on Wednesday. The government’s commitment to the IndiaAI mission, alongside an 82% increase in funding for AI Centres of Excellence, has provided a strong push toward AI infrastructure development.
AI-powered SaaS has emerged as a dominant force in shaping India’s AI landscape. The latest figures show a massive surge in enterprise AI spending, which skyrocketed six-fold year-on-year (YoY) to $13.8 billion in 2024, up from $2.3 billion in 2023. According to the SenseAI ‘InvestAI 2025’ report, nearly 66% of AI startups in India are focused on AI-powered applications, with Enterprise AI SaaS leading the charge.
Rahul Agarwalla, Managing Partner at SenseAI, commented, “AI SaaS firms are already trading at 2X the multiple of a non-AI SaaS company. AI-first companies are scaling faster than ever before.” The report’s evaluation of 849 AI startups highlights India’s growing focus on AI applications and tooling. Agarwalla further noted, “The next wave of AI innovation will be shaped by how India builds its AI backbone.”
The shift towards AI-driven solutions is reshaping the software industry, particularly as companies move away from traditional subscription models towards outcome-based pricing structures. This transformation is positioning AI startups to not only disrupt the software industry but also accelerate growth at an unprecedented pace.
Another major trend is the rise of Edge AI, which enables AI to run directly on devices, eliminating the reliance on cloud computing. Investments in Edge AI are expected to grow dramatically from $21 billion to $143 billion by 2034, as AI-powered applications in smartphones, wearables, and IoT devices become more prevalent. This shift is not only making AI more accessible but also opening new revenue streams, particularly in consumer technology.
The media and gaming sectors are also undergoing significant changes due to the rise of generative AI, which is transforming content creation processes. Meanwhile, AI tooling startups, which help optimize and scale AI deployment, are gaining traction, accounting for 22% of India’s AI startup landscape.
Looking ahead, the report highlights the next five years as crucial for determining India’s role in the global AI race. The country is not only becoming a major consumer of AI but is poised to be a key creator of AI-first businesses on the global stage.
