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In today’s newsletter:

• Half dozen AI startups eye fundraise
• Meta's AI governance push in India
• The UPI wake-up call

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AI here, AI there, AI everywhere. 

Venture capital firms are on a dealmaking spree and AI seems to be the favourite theme.

At least six Indian AI startups are in advanced stages of raising fresh funds, sources told us. 

• Dealmaking is at a high because VCs are looking to increase AI exposure in their portfolios

Accel is doing: 

• A $1.5 million round in Vaya, an AI astrology startup
  
  
• A $4-5 million deal in August AI, a health guidance company
  

There’s more. 

• Prosus is cutting a $4-5 million cheque for Arivihan, an Indian AI-based automated learning platform
   
• Stellaris Venture Partners is writing a cheque of the same size for Pivot AI
   
• Vertex Ventures is also negotiating another round with Hakimo AI, an AI-powered remote guarding and monitoring solutions provider, and an existing portfolio company 

And lastly, Golden Sparrow VC is in the final stages of investing $400k in HostedAI, a software platform that helps manage GPU resources, sources said. 

“I can bet there are at least a dozen more AI deals that VCs are negotiating right at this point – every VC wants to have an AI play in some form or the other. However big or small,” a source told us.

These investments come at a time when AI is rapidly advancing in India, and most VCs are bullish on the technology’s potential and the massive outcomes it could yield.

• While AI startups are mushrooming, even older firms—especially those in the SaaS space—are pivoting to stay relevant, resulting in increased activity

Dive deeper

WhatsApp is everywhere in India and so is artificial intelligence (AI). Meta is looking to ride that wave, with a special focus on e-governance.

Meta is in talks with state governments to make citizen services more easily available through WhatsApp, India head Sandhya Devanathan told us in an interview. The company is also aiming to help government employees work smarter and faster using its Llama AI model. 

• The social networking giant has signed up Andhra Pradesh, Maharashtra, and Odisha to launch WhatsApp chatbots offering multiple services through a single phone number

This approach differs from the traditional model, where each citizen service had a separate website or phone number, Devanathan said.

Andhra Pradesh’s Mana Mitra chatbot launched with 160 citizen services in January and expanded to 200 by March, with plans to reach 500 by June. Mana Mitra had facilitated over 5.1 million transactions, benefiting 2.5 million citizens, as of March.

Maharashtra aims to offer more than 500 services while Odisha plans to integrate 429 government services when they launch their respective WhatsApp chatbots in the coming months.

"If you add AI and voice-enabled services at a later point, then inclusion becomes really powerful, because now you’re talking to people who may not be comfortable communicating in English," she said.

These moves come as Meta doubles down on its business messaging ambitions in a bid to diversify its revenues. India, one of the largest markets for paid messaging globally, is a central piece to this strategy.

Also read: Meta India head Sandhya Devanathan on why India is a key market for WhatsApp Business, AI initiatives

Meta, which counts India as its biggest user market with over a billion users across its products, is also working to make Llama more relevant to the country, Devanathan said.

• Steps being taken include adding more support for Indian languages in future Llama models and ensuring the datasets reflect India’s diversity. Llama 3.1 added Hindi support in July 2024. 

Another key focus area is expanding collaborations with enterprises and system integrators to drive Llama's enterprise adoption.

Go deeper

When UPI sneezes, India catches a cold!

In a country where chaiwalas to CEOs use the digital payment network, even a momentary hiccup in UPI can feel like a national emergency.

The Unified Payments Interface (UPI) is the digital backbone of daily transactions in India—and lately, it’s been showing signs of strain.

• Over the last 18 days, the system faced four outages, two of which were at the National Payments Corporation of India (NPCI), the body that manages UPI’s core infrastructure

What's the biggie? When a single bank goes offline, users can switch to another. But when NPCI’s servers go down, the entire ecosystem feels the heat.

Around 40 crore users rely on UPI, generating 60 crore transactions daily.

• 83% of all digital payments in India now go through UPI

It’s the go-to for everything — from paying electricity bills to buying groceries via QR codes.

Several bankers and fintechs are demanding alternative solutions such as parallel bank servers to separate software to run UPI transactions.

• More than 85% of UPI transactions are below Rs 500

• Bank servers are not designed to do such several micro transactions

• UPI Lite designed to reduce the load has not taken off in a big way

Some fintech executives are demanding that the Reserve Bank of India bring back the NUE idea.

Find out more

Tata Consultancy Services (TCS) found itself at the center of an internet storm over the weekend after its management announced a delay in this year’s wage hike cycle amid ongoing business uncertainties. 

• As India’s largest IT services company, TCS employs more than 600,000 people and is the biggest recruiter of engineering freshers

TCS CHRO Milind Lakkad spoke to us about the reasons behind the wage hike delays, the outlook on the impact of AI on hiring and deployment, and concerns surrounding potential changes to the H-1B visa policy.

Read the full interview

• The commerce and industry ministry will allocate a major part of the second Rs 10,000 crore Fund of Funds Scheme (FFS) for startups to budding entrepreneurs in sectors such as new-age technology, artificial intelligence, and machine building, an official said.

• Spotify is making it easier for brands in India to create high-quality audio ads in minutes with the help of generative AI, as part of the audio streaming platform's efforts to boost its advertising business in the country.

Hold onto your cheese wedges, folks! 

• That chaotic cat-and-mouse crew, Tom and Jerry, just got an AI-powered reboot

A one-minute episode generated entirely by text prompts using Stanford and NVIDIA’s TTT-MLP tool has gone viral.

But reactions are mixed: critics call it “soulless” and worry about the future of original animation. Some flagged animation flaws, while others questioned whether it’s even legal. 

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