Why Indian AI Startups Still Seek Validation from the West

Every few months, young Indian AI startup founders quietly board a flight to San Francisco. They raise money, sign a few contracts, soak in the energy of a market that pays fast, and then come back to India. The pattern is no longer anecdotal. It is a cycle. 

To build AI for India, founders still feel they must first succeed abroad. 

“Sadly, validation from outside has always led to acceptance inside [India],” said Apoorv Sood, global GTM head of smallest.ai, in a conversation with AIM. 

The enterprise behaviour has not kept pace with India’s talent landscape. He wishes it would change.

smallest.ai was started by Sudarshan Kamath and Akshat Mandloi in Pune. The founders moved to Bengaluru for talent density and eventually moved to the US for capital and customers. 

Sood said building entirely in India slows companies down.

“If you have to build a business in the US, you have to be in the US,” he said. “Access to the capital ecosystem is much more advanced and 5-10 times faster.” The company raised $8 million in its seed round in October, led by Sierra Ventures, with participation from several others.

Many of these startups are not leaving India. They are coming back with tech shaped in harder markets. Sood said that after years of superficial AI experimentation, India has begun to see a real shift. “My mother uses ChatGPT,” he said, laughing at how fast consumer comfort has grown. 

Enterprise adoption, however, remains slower. Sood highlighted that labour costs in India are so low that employers prefer to hire workers rather than invest in advanced technology. 

Building Global Tech from the West

Smallest.ai’s core technology is built for India’s conversational chaos. For instance, he points out that many people say “Infy” instead of “Infosys”.

The company is betting on speech technology built for accents, mumbles and informal speech patterns. Sood believes real Swadeshi tech comes from global excellence. 

“The real Swadeshi Tech is somebody who’s building for the globe, keeping your own country in mind,” he said.

Amartya Jha, co-founder and CEO of CodeAnt, reached a similar conclusion but took a different approach. He and his co-founder permanently moved to the US, got backing from Y Combinator and raised $2 million in seed funding.

While engineering strength sits in India, sales strength sits in the US. “Our primary customer is the US, not India,” he said. Jha’s answer to the Swadeshi debate almost mirrors Sood’s.   

CodeAnt, an AI-powered debugging and reviewing platform, competes with established large players like SonarQube and serves customers in both the Western and Indian markets. 

For Jha, the problem is not the talent. It is the mindset. “Most Indians are risk-averse,” he said. As a result, the funding loops stall. Domestic investors often want to see a US firm write the first cheque before conviction builds. 

Jha said he also noticed a behavioural shift once he relocated. “When we see that this guy is there outside India building something big, having better customers, we value our time better,” he said. When he took the same calls from India, decisions were delayed. After he moved to the US, the same clients closed in weeks. 

He does not endorse the behaviour, but states the reality. 

“Stop playing games,” he said. “If you believe the market is good, invest.” He argued that investors behave like a late-stage fund even at the seed stage, demanding excess proof before backing a company, defeating the whole purpose. 

There are Founders Who Stayed

Ashutosh Singh, co-founder and CEO of RevRag, summarised the issue more bluntly. He said investors often want traction before imagination, a mismatch for AI startups that require compute burn and long-term conviction.  

“Foundational and platform bets require patience,” he said, pointing out that even companies like OpenAI and Anthropic continue to burn capital. 

Unlike Sood and Jha, Singh is doubling down on India for the next two years, betting enterprise maturity will follow. “The capital is available while conviction has to catch up,” he said. 

Sood also pointed to a cultural layer. Global validation still commands respect among Indian enterprises. Sales cycles shorten not because the product changes, but because perception does. 

The sales cycle tightens because the founder is no longer seen as a local vendor but a global contender.

Despite different paths, all three founders agreed on one thing. India should not fight global competition. It should match it. “Build the best product and let people use it,” Sood said.  “Fair competition, fair market, confidence.” 

Jha echoed similar sentiments. He hires young engineers under 25 in India and pays them at a global benchmark. “That’s what world-class building actually requires,” he said. 

So why do founders still leave?

Because the confidence loop has not caught up with the talent loop. Because enterprises still chase free proof of concepts. Because investors want someone else to go first. Because early buyers look westward before trusting locally. 

Yet something is shifting. Indian consumers have embraced AI faster than expected. Enterprises are beginning to deploy AI solutions at scale. Engineering depth remains unmatched. The market is warming, slowly but visibly. 

The post Why Indian AI Startups Still Seek Validation from the West appeared first on Analytics India Magazine.

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