We are beginning to feel the impact of Artificial Intelligence (AI) in our daily lives, whether through AI assisted chatbots or personalized social media feeds. In India, some small farmers are now using AI-powered weather forecasting tools to make agricultural decisions while airlines like Air India are integrating the technology into their flight booking systems.
However, the potential of AI is still largely untapped and Alok Goyal, Partner, Stellaris Venture Partners, believes that India is best poised to harness the opportunities arising from the technology.
“We have a huge opportunity in the next two decades,” Goyal said in a conversation with its founder and CEO Shraddha Sharma. your story.
In an exclusive interaction, partners at Bengaluru-based venture capital firm Stellaris Venture Partners, including Goyal, Rahul Chaudhary, Ritesh Banglani, and newly promoted partner Naman Lahoti, discussed the future of AI in the country and the role of AI and deeptech. Especially in terms of startups in the country.
Lahoti highlights that AI is disrupting the creation and delivery of digital products and services, enabling the development of previously impossible offerings while reducing costs and accelerating creation.
He cited the example of GoodScore, a Stellaris portfolio company that offers hyper-personalized financial education products to delinquent users to improve their CIBIL scores, which would not have been possible without AI.
On the distribution side, he explains that AI is breaking down language barriers, making the content created more accessible to a wider audience. Additionally, AI is reducing production costs, making products and services more affordable and accessible to India’s next 300 million consumers.
Chowdhury noted that in India, AI could be beneficial with potential applications across multiple industries in sectors such as financial services, healthcare, education, content, entertainment, and media.
AI in education
“We are very enthusiastic and we are actively looking for companies that use AI to deliver education,” Chaudhry notes.
“The challenge in education and edtech is that we’ve got a lot of users who have started using it, companies have been built, funded, the effectiveness has not yet been delivered compared to what you can get in the offline world,” he adds. .
For example, people prefer to shop online, he notes, because the experience is so much better than going to a retail store — it’s more convenient, offers a wider selection, and better pricing.
Unfortunately, edtech hasn’t been able to tilt things in its favor, Choudhary notes, while on paper everyone can access content, it’s not interactive. Students, especially in the 12th grade and K-12 and test prep sections, don’t have many incentives or are disciplined enough to continue learning online.
On the other hand, vocational upskilling has worked because students aged 23 and over have an incentive to learn, which allows them to effectively engage with asynchronous content.
He explains that AI can enable 15- to 18-year-olds to learn without highly skilled teachers by engaging them as mentors. It can create videos, answer questions in real time, based on user progress, and build knowledge graphs to identify gaps in understanding. If a student is struggling with a concept, AI can show them simple related topics to revisit, guiding them to the right content.
“So that’s the promise of AI, which I think can make you feel like you’re being taught by a real teacher,” Chaudhary adds.
Stellaris is a company that teaches Biology, Physics and Chemistry to students preparing for 11th and 12th board exams without the need of human tutors.
breath
Speaking about the software-as-a-service (SaaS) sector, Goyal says that with so much capital flowing into SaaS in recent years, people have forgotten that it is actually a relatively linear business.
“A lot of software is sold and if it’s sold, you need a sales machine, you need to hire salespeople, you need to sell. It’s a relatively linear ramp-up that you have to go through. If you take on a lot of capital, it doesn’t help, ” he commented.
He adds, “Thoughtful construction and good utilization of capital has not been the case in the last few years, but we are seeing people rethinking the way they build today and we are very excited about the development of Saas from India.”
Goyal explains that when Zoho and Freshworks were founded, many questioned their business models. However, over the past 15 years, their experience has helped build significant talent and know how global software companies can be built from India.
According to him, on the enterprise side, there are three major opportunities in AI over the next one to two decades.
One, almost every enterprise process will be rethought and reimagined using AI. An example of a company funded by Stellaris is OrbitShift, which is rethinking the role of salespeople in the big deal environment.
The second big space is that the way software is written is being rethought, from design and coding to testing, maintenance, and deployment – all of these steps are being reimagined.
In fact, in its third fund just launched, the VC firm has already made its first commitment to a company that is rethinking how test automation for mobile apps is done using AI.
The third, which is of particular interest to Stellaris, is the merging of software and services.
“We’ve historically thought of these as two different spaces. But we think AI is reimagining software that requires some services, and services that can be done by software. And that’s an area where India has a very unique advantage,” says Goyal. .
in the treasury
Last month, Stellaris closed its $300 million Fund III, which aimed to lead seed and Series A investments in 25-30 startups over three years. Staying true to its investment thesis, the firm will focus on consumer technology, AI, SaaS and financial services. It has also supported startups in sectors such as B2B commerce, education, mobility, and healthcare.
Speaking of funding startups, Banglani analyzed his entire deal flow a few years ago and found that only 2% of companies succeed, while 98% fail – as opposed to the commonly stated 90%. For funded companies, the failure rate is still 80%, but this means that the success rate increases from 2% to 20%, reflecting a significant improvement.
“The vice-chancellor’s job is not really to mitigate risk. The risk is only slightly reduced from 98% to 80%. But our job is to generate upside and once a startup gets funding, the chances of generating that upside increases,” Banglani notes.
“So we don’t see our role as risk mitigation, we see our role as finding among those hundred startups, the 10 that have 10 times better chance of success than the others,” he adds.