VCs becoming marginal in AI cycle, enterprises should invest in the sector: Peak XV’s Shailendra Singh

Venture capital firms have become “somewhat marginal” in the artificial intelligence investment cycle given the scale of capital required, and large enterprises should increasingly fund AI companies alongside traditional investors, Peak XV Partners managing director Shailendra Singh said on Saturday.

“Every large enterprise should be investing in AI,” Singh said at The Economic Times World Leaders Forum in New Delhi. Pointing to HCLTech’s investment in Indian foundational model startup Sarvam AI, and global bets such as Amazon’s backing of Anthropic, he said corporate balance sheets can deploy capital at a scale most venture funds cannot match.

VCs would still matter for spotting companies early and helping them get started, Singh said, but the AI cycle was “so big” that enterprises would have to become a larger source of capital. He called the pace of change in AI the fastest he had seen in his career.


On Peak XV’s growing bets on US AI startups, Singh said India remained well behind the technology frontier, making exposure to leading global companies important for the firm to learn and support Indian founders better.

“We are extremely excited about wanting to make very long-term investments in India, so that India can be at the frontier in AI. But…we are far away from that,” he said. “For us to be a very good partner to the best founders in India, we must ourselves have direct experience of working with the best founders in the world.”

Peak XV, which raised a $1.3-billion fund earlier this year, has made AI a major focus across applications, enterprise software and infrastructure. It was an early backer of Sarvam and recently joined San Francisco-based voice AI startup Wispr Flow’s $280-million round at a $2-billion valuation. In February, it announced about Rs 160 crore of investments across five early-stage AI startups.

Singh’s comments come as AI funding in India accelerates, though it remains a fraction of the capital flowing into US companies. Sarvam raised $234 million in June in a round led by HCLTech at a $1.5-billion valuation, with Peak XV also participating. In August, the company raised a second tranche of $75 million from Nvidia and Glade Brook, taking the total round to about $310 million.

The government has stepped up its AI push through the Rs 10,372-crore IndiaAI Mission, which is backing indigenous foundation models and subsidised compute. It has identified 20 sovereign model proposals for support and sanctioned compute to more than 200 projects.

Singh said infrastructure could become a major source of value creation in AI, with compute and cheap power emerging as key inputs. India’s competitive power and data-centre costs, he said, could drive a “monster build-out” of data-centre capacity over the next five to ten years.