VCs chase Indian developer tools startups amid AI frenzy
Leading investors such as Accel, Lightspeed, Elevation Capital, and WestBridge Capital are backing startups focused on AI-led software integration, DevOps automation, and large-scale adoption platforms. 'Each time the underlying models advance, the platforms shift, and with that come entirely new opportunities,' said Krishna Mehra, AI partner at Elevation Capital. Such cycles create room for founders to build globally competitive companies, he added.Elevation has closed 15–20 AI investments in the past two years, compared with an average of 5–6 deals annually earlier.
Big fundraises The sector is seeing several sizeable early-stage funding rounds.San Francisco-based UnifyApps, which helps enterprises connect and streamline their software tools, is raising about $20-25 million in a round led by diversified fund WestBridge Capital, people aware of the matter said.
The company had earlier secured $20 million from Iconiq Growth in November 2024. Elevation Capital is also an investor in it. Founded in 2023 by a 10-member team including Pavitar Singh and Abhishek Khurana, UnifyApps is among the fastest-scaling enterprise integration startups.Emergent AI, an AI-backed platform for building, testing and deploying applications, has raised about $20 million in a round led by Lightspeed Venture Partners.Emergent claims to have crossed $10 million in annual recurring revenue just two months after launch. The startup, a Y Combinator alum, had earlier raised a $500,000 seed round in September 2024, according to Tracxn.UnifyApps, Emergent and Lightspeed did not respond to ET's queries until press time Monday. WestBridge declined to comment.
ET reported on July 22 that agentic AI startup Composio is raising $25 million led by Lightspeed. Early this month, Refold AI, which automates enterprise API integrations, came out of stealth with a $6.5 million seed round co-led by Eniac Ventures and Tidal Ventures. Around the same time, software productivity platform CodeKarma raised $2.5 million from Prosus, Accel and Xeed Ventures (formerly 021 Capital). Together Fund founder Manav Garg said AI is entering its next phase, with agents moving from basic reasoning to having memory. 'Earlier, an agent would forget past interactions. Now they can retain context and build on previous conversations. This shift will require an entirely new layer of infrastructure,' he told ET.Nexus Venture Partners has also been aggressive. In a LinkedIn post, investor Arjun Gandhi said the fund has backed 20 AI startups across infrastructure and applications in India and the US over the past three years and plans to double down further.
Founders' perspective Founders ET spoke with acknowledged heightened investments, especially in vertical and coding agents.'Coding agents or domain-specific agents are getting funded because investors believe they have a clear path to scale. But globally, most of the money is going into the foundational layer,' one founder said.ET had earlier reported that several founders are relocating to the US, followed by investors setting up shop there, to stay close to the global AI epicentre.Still, India has advantages.'Indian companies, backed by a deep tech talent pool, are faster and cheaper to scale compared with global competition. We don't have the same access to Silicon Valley capital, but the economics here are stronger,' said Praveer Kochhar, cofounder of Delhi-based agentic AI startup Kogo.Indian GenAI startups raised $524 million in the first seven months of 2025, as per Venture Intelligence. This is the highest in five years, up from $475 million in all of 2024 and 4x the $129 million raised in 2021.Globally, GenAI startups raised $49.2 billion in the first half of 2025, according to EY, up from $44.2 billion in all of 2024.The AI space has become hypercompetitive worldwide. India, with its lower costs and strong engineering talent, is emerging as a serious contender in AI infrastructure and developer tools even as the deepest pools of capital remain in the US. Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Hacking, ransom, lawsuits: Why social engineering is TCS, Cognizant's latest headache
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