Lightspeed Venture Partners, a prominent early-stage investor in Silicon Valley with over $28 billion in assets, believes the current excitement surrounding AI valuations doesn't diminish the technology's potential to revolutionize all sectors. In a recent interview with ET, Lightspeed's cofounder Ravi Mhatre and partner Bejul Somaia discussed the AI landscape, India's role in it, and Lightspeed's strategy.
Mhatre emphasized India's significance as a massive usage market and a talent hub for AI. He noted the increasing presence of major AI labs in India and the emergence of AI-native companies, especially at the application layer. Somaia, who helped establish Lightspeed's India operations, highlighted that generative AI's usage might be overhyped but that India's AI market is expected to reach $7.8 billion by 2025, growing at a CAGR of 20.2%.
According to Mhatre, India is already Anthropic's second-largest market globally in terms of usage, mirroring the adoption patterns of platforms like Google and LinkedIn. Beyond usage, he noted that Indian developers are actively building AI-powered products.
Lightspeed has been actively investing in AI, including leading a $3.5 billion round in Anthropic and backing companies like Elon Musk's XAI, France's Mistral, and Indian startup Sarvam AI. Somaia mentioned that approximately 35% of Lightspeed India's latest fund (Fund IV) investments have been allocated to AI-native companies. In 2023, Lightspeed led a $41 million Series A funding for Sarvam.ai.
Somaia addressed concerns about the sustainability of foundation models, suggesting that while the price per call might decrease, the volume of calls will increase significantly as more enterprises adopt generative AI and agentic systems become prevalent. He also expressed optimism about India's macroeconomic stability, digital adoption, and the quality of its founders, viewing recent challenges faced by some startups as "bumps in the road".
Lightspeed's investments reflect a focus on both the foundation and application layers of AI. The firm's global investments in the last 18 months include $1.1 billion across 72 deals and 61 AI companies. This strategy encompasses infrastructure and tools required for companies to consume AI across industries.
Lightspeed's approach involves identifying companies with strong technology adoption, commercial use cases, and customer stickiness. For instance, their investment in Qure.ai, an AI-powered healthtech startup, followed extensive due diligence and a year of conversations.
Overall, Lightspeed views the AI revolution as a generational shift and is actively investing in companies building tools and applications to make AI infrastructure and models more accessible. While acknowledging the hype surrounding AI valuations, the firm remains optimistic about the long-term potential of AI and India's role in shaping its future.
