Why Accel and Google are chasing India’s newest AI founders

Target startups must be part of Accel’s Atoms accelerator program, an early-stage support initiative for Indian and Indian-origin founders. Accel launched its Atoms program in 2021 and has invested in nine AI companies through the accelerator so far. These are: Anko, BPR Hub, dubdub.ai, FinSynth, HighRev.ai, Ripik.ai, Rocket (formerly DhiWise), Skoob and Zingle.

Since the launch of Atoms, Accel has seen a shift in the type of AI companies it supports. “India has definitely been a hotbed for both consumer and enterprise companies. The challenge on the consumer side is that Indians are very cost conscious,” Prayank Swaroop, partner at Accel, said at the virtual media roundtable.

“But we are starting to see a lot of innovation specific to India. Now that model prices have come down, we want our founders to develop more consumer solutions for the same Indian consumers.”

Accel currently plans to support companies in four broad industries as part of its 2026 AI cohort starting in February. These are coding (Future of Coding), productivity (Future of Productivity), creativity (Future of Creativity) and entertainment (Future of Entertainment).

Earlier this year, Accel invested in two consumer AI startups. Besides Prosus, it backed local language online learning platform Arivihan, which raised $4.17 million in a seed round, and healthcare AI assistant August AI, which raised $3 million.

For AIFF, the choice to support Indian AI startups was a deliberate one. “We want to directly support the country’s most promising AI talent and truly support the next wave of AI innovation coming from India to the rest of the world,” said Jonathan Silber, co-founder and director of AIFF.

In addition to the capital investments made by the two companies, startups that are part of the new group will also receive $350,000 in Google Cloud credits. Startups can also use these credits for other offerings like Google’s Gemini AI models and AI research lab DeepMind. “When we find interesting companies that are a good fit, we bring in our own people. Our teams can get model feedback from our portfolio companies so we can make the business better,” Silber said. “They can improve the product. They can figure out what features to include in the roadmap. So it’s kind of a give and take for both parties.”

Major AI companies in the US are increasingly operating in India, primarily due to the size of the country’s population. “The volume of people that India has, you can’t match anywhere else in the world except China. Secondly, the amount of languages ​​India has. But overall, the amount of data is so high that the models become smarter and can provide better answers with more access to data,” said Raja Lahiri, partner and technology industry leader at Grant Thornton Bharat LLP.

Such joint investments also mean more AI-first startups entering the ecosystem, meaning more innovative solutions can be developed. “Companies can’t automate everything in one day, but they can choose different silos to build and automate things like HR, recruitment finance, and so on. Start-ups founded to solve these problems are what drives venture capital investments,” Lahiri said.

Notably, Accel’s partnership with AIFF is the second of its kind for Atoms. In October, the firm partnered with tech investor Prosus to co-invest $1 million each in what it calls “leapfrog tech” companies as part of the Atoms X pathway of its accelerator program.

“Partnerships between venture funds and global deep tech companies can play an increasingly important role in strengthening the early-stage ecosystem. By bringing together capital and potentially advanced technology, they provide young startups with a stronger foundation to innovate and scale sustainably,” said Amit Nawka, partner in charge of deals at PwC India.

Both Accel and AIFF declined to specify how much equity capital they would receive from companies that would be part of their accelerator programmes. “We’ve made investments where we have single-digit equity holdings globally because we believe the company will do exceptionally well,” Swaroop said. “Traditionally, whatever the Indian market is pricing the company at or attracting international venture capitalists, then I think we will have to compete against those terms.”

Buying or long-term bets?

Earlier this year, Google announced it was acquiring Israeli cloud security company Wiz for $32 billion, making one of its largest acquisitions to date. The deal is awaiting regulatory approval.

Similarly, it was on track to acquire AI coding assistant Windsurf, but it ended in a $2.4 billion deal to hire key executives as well as provide access to some of the company’s technologies on non-exclusive terms.

Silber said that while there may be an early recovery, big stock purchases may seem like a way to facilitate future AI acquisitions, but he said that wasn’t the intention but didn’t rule out the possibility.

“If it makes sense at some point for Google to acquire one of these companies, that could be looked at, but that’s certainly not the intent of how we’re building this investment firm.”

According to a report by mergers and acquisitions platform Dealroom, artificial intelligence venture capital investments reached an all-time high in 2024, reaching $110 billion, an annual increase of 62%. Early stage investor Antler While it was the company with the most agreements with 74 agreements, it was followed by Andreessen Horowitz with 66 agreements and General Catalyst with 55 agreements. Accel ranked eighth with 34 deals.