A third of startups in Peak XV's latest Surge cohorts are building in AI: Rajan Anandan

Rajan Anandan, MD, Peak XV

As venture capital firm Peak XV opens the door for startups to become a part of the tenth cohort of its early-stage accelerator programme, Surge, it is rolling out the red carpet for young artificial intelligence (AI) companies.

According to Peak XV managing director Rajan Anandan, in the last several cohorts of Surge, about a third of the companies have been AI-focussed and the VC firm expects the number to go up.

“At the seed stage, the most important factor for us is the founding team. With AI, we are looking for a mix of deeply technical founders but also founders who have deep insights into the problem that they're trying to solve,” Anandan told Moneycontrol.

The application process for the 10th cohort, which got underway on July 11, will remain open till August 15. Those selected will attend the acceleration programme from October to February. The opening week in Bengaluru and closing week in the San Francisco Bay Area will be in person, the rest will be online.

Surge will invest up to $3 million of seed capital in all participating companies in the form of equity.

Peak XV, which parted ways with Sequoia Capital in 2023 as the Silicon Valley-based investor’s India and Southeast Asia arm, remains one of the largest backers of tech companies in the region with Rs 16,000 crore of dry powder to invest across stages and sectors.

As the VC firm looks to attract more AI startups, it has revealed a list of 28 AI-focussed companies it has backed at the seed stage since 2019.

Twenty-seven of these startups happened after the Covid outbreak in 2020. Of these, 12-13 startups got the funding since the beginning of 2023, after the launch of ChatGPT.

In May this year, Atlan raised $105 million in a Series C funding round led by Singapore’s sovereign wealth fund GIC.

“We are seeing exciting early activity in both the data infrastructure and AI tooling layer, as well as in applications, and we are excited about the quality of companies that we are seeing in our region,” Anandan added. "We think the most exciting area for companies building from India and the broader Asia region for the global markets will be in the application layer."

The majority — 10 of 13 — of the startups in Surge’s ninth cohort, announced in October, were focussed on AI and other deeptech areas. Semiconductor chip design startups such as InCore and Mindgrove were also a part of the last Surge batch.

“In our last cohort, the ninth cohort of Surge, we evaluated close to 5,000 companies to pick about a dozen companies and this has historically been the trend. We partner with about 0.2 percent of the companies that we evaluate and we expect that to be the case in upcoming cohorts as well," Anandan said.

The past three cohorts are a reflection of the rapidly evolving nature of the ecosystem in India, Southeast Asia and Australia, he said. Surge partners with a broad range of tech and tech-enabled companies across AI, software and infrastructure companies to consumer brands, travel, gaming, healthcare, education, fintech and financial services as well as deep-tech companies spanning advanced manufacturing, semiconductors, mobility, green hydrogen, and space, he said.