GenAI, climate & fintech, hot bets for investors next year: Accel’s Prakash
The generative artificial intelligence (AI), climate tech and fintech sectors will be the hotspots for venture capitalists and founders in the coming year, according to the prediction of Prashanth Prakash, founder and partner of global venture capital firm Accel Partners in India and chairman of Karnataka Startup Vision Group.
Prakash said around $25 billion has been invested globally in building Gen AI. But much of that capital has not yet come to India, presenting huge opportunities for startups in the country. He said Indian startups are probably best positioned not to create new large learning models (LLMs), or build many compute-intensive AI companies, but can actually create picks and shovels.
“We can be the miners or people building applications on top of Gen AI,” Prakash said at the Bengaluru Tech Summit. “We can certainly build an infrastructure that will enable the deployment of Gen AI.”
Generative AI is a type of artificial intelligence technology that can produce different types of content, including text, visuals, audio, and synthetic data. This is expected to disrupt the entire marketing stack and healthcare, including drug discovery, and create several ‘co-pilot’ opportunities across industries.
The other option is climate technology. The startups are moving from building technology platforms to creating physical products and platforms to address some of the climate challenges that will hit India first.
“Once our startups build these technologies, we can bring them to the Global North and collaborate with the rest of the world,” said Prakash. “I think investors feel more comfortable financing the innovation when it comes to building physical products, because no major economy can be built solely on the backs of a digital economy.”
He said that in a country like India, manufacturing is crucial. Many investors and startups are now moving into and investing in the convergence of areas such as sustainable manufacturing, Industry 5.0 (people working alongside robots), the Internet of Things (IoT) and blockchain and AI in manufacturing. A new generation of manufacturing companies are expected to emerge from India and investors and founders are very interested in this.
The other major area of interest is fintech. What is unique about it is that it involves billion-dollar transactions, which are expected to create new opportunities. According to experts, India will have 1 billion smartphone users by 2026, while rural areas will drive sales of internet-enabled phones.
“Regulatory technology on top of the billion transactions is a great opportunity,” Prakash said. “There are also opportunities for startups in the digitization of land registries and other government assets.”