Bengaluru: Early-stage investors are eager to make larger and riskier bets on quick commerce and consumer-focused artificial intelligence (AI) tools in India, underscoring optimism in the growth prospects of these sectors, a top executive at venture investment firm RTP Global said.
With bigger cheques and higher stakes, these investors are diving in early—betting boldly, watching quietly, and waiting to see how the gamble plays out, Nishit Garg, partner at RTP Global’s Asia operations, told Mint in an interview.
“Quick commerce and AI are the hype sectors in India today. These sectors are commanding bigger rounds and ticket sizes as well as higher valuations," Garg added.
RTP Global has made a series of investments in quick commerce and AI in recent months. In July, it led a $3 million seed round in Trupeer AI, a software platform helping enterprises create studio-quality tutorials and guides. This followed a $9.6 million investment in private cloud infrastructure startup Kluisz.ai, the largest seed round in the AI space so far this year.
RTP Global is also looking to make bolder follow-on investments in these sectors this year, Garg said.
In quick commerce, RTP invested in FirstClub—a curated grocery delivery firm founded by former Cleartrip chief executive Ayyappan R—in August last year, followed by fast-fashion startup Outzidr, which aims to expand its rapid delivery segment soon.
Early-stage backers are also realizing that Indian firms have emerged as the hotbed for deals, offering attractive exit opportunities for investors. “Investors are starting to take higher ownerships in lucrative deals. Many are tweaking their portfolio strategies to allocate higher capital per ticket size," Garg said.
Early-stage investments in India have been growing remarkably despite a slump in overall funding, which fell more than 20% year-on-year in 2024, as a result of caution amid global economic headwinds combined with market saturation, rising customer acquisition costs and unclear unit economics.
Early-stage bets witnessed a 25% jump to $355 million in 2024 compared to the previous year, fuelled by optimism in direct-to-consumer brands. Seed stage funding, too, rose 18% to $141 million during the year, as per estimates by market intelligence firm Tracxn.
Risky but rewarding
According to Garg, despite the high likelihood of startup failures in the AI space, investors remain undeterred. “I think most funds today understand that the mortality rate in AI will be way higher than the other sectors. But at the same time, it’s way easier to launch a company, and because of that, there is so much competition."
“You have to be okay with one company out of ten surviving. In other sectors, maybe 3-4 will make it," Garg said.
They’re betting that the few companies that do survive will generate returns large enough to compensate for all the losses along the way. “The mortality rate may be high, but the size of the prize makes it worth the risk. The ones that survive will more than make up for everything else," the executive noted.
In the high-stakes world of quick commerce, early-stage backers are increasingly approaching the sector with the mindset that it mirrors the capital-intensive nature of traditional e-commerce. Building a successful quick commerce business will demand significant funding, repeated capital raises, and a cap table filled with deep-pocketed global investors.
Given this trajectory, early investors are opting for larger ownership stakes upfront, fully aware that they will face dilution multiple times over the company’s lifecycle. “When you come in early, you need to take higher ownership, because you will get diluted over time," he said.