Gen AI, climate tech and fintech main themes for next year: Accel’s Prashanth Prakash 

Prashanth Prakash, founding partner Accel and chairperson of Karnataka Startup Vision Group

Generative artificial intelligence (AI), climate tech and fintech sectors will be the key themes for founders and venture capitalists in the next year, Prashanth Prakash, one of Accel’s founding partners and the chairperson of Karnataka Startup Vision Group said at the Bengaluru Tech Summit on November 29.

Prakash added that around $25 billion has been invested into developing and building Gen AI but that capital is yet to come to India, underscoring that there is potential in the world's third-largest startup ecosystem. Gen AI will disrupt the entire marketing stack and will also change the way healthcare companies function, including drug discovery.

While Prakash maintained that Gen AI will transform how companies work, he added that the climate tech space is now "more important than ever. Investors are more comfortable investing in startups that are building physical products – manufacturing is key,” Prakash said at the summit.

“More startups are getting into the making of sustainable products and they are converging with upcoming technology like AI,” he added.

At another industry event recently, Prakash said manufacturing-focused startups received $8 billion in investments over the past seven years. There are around 1,000 startups building in sectors like construction, food processing, textile, chemicals and toys, among others. The global packaging market, electric vehicles (EV) and batteries are other upcoming spaces.

Along with Gen AI and climate tech, the fintech space continues to remain an “evergreen opportunity” in India largely because of the scale the country offers with increasing smartphone penetration. There are around 600 million internet users in India, which has a population of 1.4 billion.

“Regulatory tech on top of the billion transactions is another great opportunity. There is scope for startups that will help solve the digitisation of land records and other government assets,” Prakash added.

There are over 1 lakh registered startups in the country of which around 20,000 are in Bengaluru, per Prakash who admitted that 2023 was a “humbling year” for the Indian startup ecosystem which has seen just one unicorn (Zepto) this year, a sharp slowdown from 2021 when 43 new startup unicorns were minted in the country. 

“Existing unicorns must get more profitable and figure out how to make profits and list on the public markets, I think we’ll see a lot of that happen in the upcoming year,” Prakash concluded.