India's AI startups ready for funding boom, says WestBridge's Rishit Desai

“I think $50 million rounds are happening already. It's a matter of time and the pace at which these companies grow. They could raise $100 million by the end of the year or in the next six to twelve months, potentially," Rishit Desai, partner at WestBridge Capital, told Mint in an interview. Desai handles all of the firm's investments related to artificial intelligence (AI) and software-as-a-service (SaaS).

WestBridge has already made several sizable bets in 2025. In April, it led a $60 million round in Tessel, an AI-native database-as-a-service (DBaaS) platform, with Lightspeed also participating. Other deals include a $50 million Series B in UnifyApps, $40 million in Finbox for AI-driven credit infrastructure, and participation in Nexthop AI’s $110 million round led by Lightspeed Venture Partners.

Investor interest in AI has evolved over the past year. While the last three years saw broad-based enthusiasm, firms are now sharpening their focus. Firms like Peak XV, Lightspeed, and Accel are concentrating on the application layer, while Dutch investing giant Prosus is targeting consumer-centric AI startups.

Broader investment focus

WestBridge, on the other hand, is looking for companies across the board, from the infrastructure layer to the application layer, but targeting businesses. “The vast majority of our investments are looking to serve global enterprises. We have some consumer AI investments and have made a commitment to our edtech team for an investment," said Desai.

Mint reported that personalised English-language learning startup SpeakX was seeking to raise up to $15 million from existing investor Elevation Capital alongside US-based consumer tech VC firm Goodwater Capital and WestBridge.

The firm's focus on business-to-business (B2B) AI investments is due to how Desai says they can impact businesses. “If AI can help improve customer value and deliver goods or services that are much harder or more expensive to deliver, then they are adopting that," he said. “At the end of the day, B2B companies are tool providers for businesses."

The firm believes that one of the first sectors AI will disrupt is going to be India's IT and business process outsourcing (BPO) industry. While India's IT services industry grew thanks to cheap outsourcing costs, AI will further reduce those costs. “The opportunity lies in creating AI-augmented service teams that combine scalable intelligence of AI with the expertise of senior human experts," according to the firm's report India’s Next AI Frontier: AI Services 2025.

While Westbridge's investments are generally sector agnostic, in that they invest across all sectors, from edtech to mutual fund houses, they have noted that several of the larger companies that they have invested in are using AI. One of the benchmarks that the firm has for some of its larger portfolio companies is whether they “are able to use AI to do some work cheaper, faster, better than they were earlier," said Desai. “Early signs are good."

Strategic appetite

Notably, IPO-bound PhysicsWallah is building small language models, with smaller decision-making parameters, for questions related to physics, maths, chemistry, and biology. WestBridge first invested in the company in 2022, leading a $102 million Series A round. The firm also participated in the edtech unicorn's $210 Series B, which was led by Hornbill Capital in 2024.

While the fund generally invests in companies across India and the US, Desai noted that the former has picked up in the country. “Founders are a lot more savvy about where to find talent, whether in India or globally. They're also more savvy because there's an early generation of founders who are their mentors and they can team with them."

WestBridge Capital manages over $7 billion through an evergreen fund with a long-term horizon of between 5 years and 25 years. Its early-stage cheques range from $5-10 million, growth-stage investments typically fall between $50 million and $70 million, and late-stage deals span $100-300 million, with occasional outliers exceeding $500 million.

Given that the firm invests in companies across sectors, it has several unicorns in its portfolio, including ride-hailing platform Rapido, marketing automation software company Leadsquared, healthtech SaaS platform Innovaccer, e-commerce marketplace Meesho, edtech startups LEAD Group and IPO-bound PhysicsWallah. In August, WestBridge also picked up a 15% stake in Edelweiss Mutual Fund for ₹450 crore.

Some of the firm's notable exits include GlobalLogic, which was acquired by Hitachi for $9.6 billion in 2021. In September, WestBridge fully exited its remaining stake in Aptus Value Housing Finance in a block deal worth ₹2,600 crore. In November, the global investment firm exited security software company Zscaler, making a 2X return on its $200 million investment, according to news website The Arc. WestBridge also pared its stake in SaaS company Freshworks, selling 2% of its holdings and now has a little over 4% in the Nasdaq-listed firm.