Karnataka’s startup ecosystem, predominantly concentrated in its capital Bengaluru, has jumped seven positions to rank 14th in The International Startup Ecosystem Report (GSER) by Startup Genome.
This marks a file leap for the state and locations it among the many prime international hubs. Karnataka is the one Indian metropolis to characteristic within the international 40 rating. Whereas different Indian states like Telangana, Tamil Nadu, and Kerala had been a part of the report, they had been included within the rising startup ecosystem and never within the prime tier.
The report, launched on June 12 in France, presents a complete evaluation of the worldwide startup ecosystem. It analyses over 5 million startups throughout 350 ecosystems utilizing metrics resembling funding, expertise, market attain, AI readiness and extra.
Bengaluru’s Rising Ecosystem
Bengaluru’s ecosystem, pushed by fintech, area tech, and AI, reached $136 billion in 2024. The town is dwelling to over 16,000 startups and secured 47% of India’s startup funding that yr. The report acknowledged that Karnataka’s initiatives like INNOVERSE and Native Economic system Accelerator Programme (LEAP) assist deep tech innovation by financing as much as $36 million for rising applied sciences.
In conversations with AIM, Ekroop Caur, Karnataka secretary of the electronics, IT, biotechnology, and science and know-how division, mentioned that Bengaluru’s current enchancment within the Startup Genome report can primarily be attributed to the sturdy efficiency of its startup ecosystem.
A number of components contribute to this, together with the entire funding flowing into startups, the variety of exits which have occurred, and the variety of corporations which have gone public by means of IPOs.
She highlighted Karnataka’s direct funding initiatives by means of packages like Elevate, alongside the operation of 18 centres of excellence that incubate startups. Notably, some centres collaborate with establishments just like the Indian Institute of Science (IISC), offering high-quality assist to incubate and nurture profitable startups.
“Applications like Semiconductor Fabless Accelerator Lab (SFAL) and the collaboration between startups and GCCs reveal the general ecosystem working energetic startup engagement packages,” Caur mentioned. “Moreover, Karnataka has a big VC presence, with almost each VC working in India having a base in Bengaluru. All of those components mixed have contributed considerably to [the state’s] success.”
Karnataka’s Future Plans and Initiatives
The Indian metropolis has additionally been ranked fifth among the many prime 50 AI-innovating cities globally. It’s dwelling to round six lakh AI/ML professionals, which makes it the second-largest AI expertise hub on this planet.
In keeping with the report, Karnataka is a vital hub for GCCs, internet hosting greater than 40% of India’s GCCs, that are transitioning from outsourcing hubs to co-innovation centres. The state goals to double the variety of GCCs by 1,000 by 2029, probably producing $50 billion in financial output, expertise and authorities assist.
The Karnataka Startup Coverage 2022-2027 goals to foster innovation and assist startups throughout the state, together with tier 2 and three cities. The coverage additionally promotes initiatives just like the Elevate Idea2PoC scheme, which affords startups a one-time grant of ₹50 lakh.
“We’ve got an enormous announcement on this yr’s funds: the LEAP. This program can have a funds of ₹1,000 crore and can set up a number of centres of excellence, Know-how Enterprise Incubators (TBIs), and entrepreneurship growth packages, together with amenities that supply plug-and-play choices and prototyping assets in areas past Bengaluru,” Caur highlighted.
She mentioned that Karnataka has already shortlisted 11 new TBIs, which we anticipate might be finalised by the tip of this month or the start of July. These centres have been chosen by means of a rigorous analysis course of, and we consider that increasing our presence outdoors of Bengaluru might be equally impactful.
Furthermore, the state just lately introduced plans to launch a Past Bengaluru Cluster Seed Fund, which can supply unique funding assist for startups in tier 2 and three areas, pending some regulatory approvals, Caur added.
International Developments in AI and Startup Ecosystems
Paris, Delhi, Istanbul, and San Diego additionally noticed their AI-native startups greater than double from 2021 to 2024. Equally, ecosystems like Toronto-Waterloo, Shenzhen, Shanghai, and Mumbai skilled over tenfold will increase in AI-related funding between 2022 and 2024, though ranging from a low base in some circumstances.
GSER 2025 underscores AI’s significance as the first driver of development in international startup ecosystems, surpassing different sectors when it comes to enterprise capital funding and startup formation. Enterprise funding in AI additionally elevated 33% from 2023 to 2024, whereas AI startups acquired 40% of the worldwide VC funding.
Silicon Valley stays the worldwide chief in new AI startups, adopted by New York and London. As per the report, most funding for AI-Native startups is concentrated in Silicon Valley, with over $30 billion invested in 2023 and 2024.
Nevertheless, different areas are positioning themselves to compete. Beijing, for example, has grow to be the second-highest recipient of VC for AI startups up to now two years, with almost $5 billion. Whereas that is a lot decrease than Silicon Valley, it represents a better proportion relative to Beijing’s ecosystem worth and whole startup funding, exhibiting its transition to an AI-native ecosystem.
Furthermore, the US and Chinese language ecosystems dominated over 90% of the worldwide funding, with Silicon Valley alone recording 63% of AI investments. Nevertheless, the report added that Beijing has outcompeted Silicon Valley in AI depth, with extra enterprise funding directed in direction of AI-native startups. This additionally showcases China’s purpose of leveraging AI as a nationwide curiosity and energy.
“By investing in AI throughout the board—from foundational analysis and abilities growth to startup acceleration and enterprise funding—areas can construct agile, inclusive, and globally aggressive economies. It’s not about replicating Silicon Valley; it’s about crafting a particular, purpose-driven strategy that leverages native strengths and addresses international challenges,” Elizabeth Scott, chief government director of Turing Innovation Catalyst Manchester, mentioned.
The worldwide startup panorama is experiencing a major shift. As ecosystem worth declines and AI accelerates its dominance, conventional approaches have gotten inadequate.
Furthermore, the report highlighted the urgency of entrepreneurial AI insurance policies to make sure the expansion and success of native startups with out the danger of being left behind. Creating methods tailor-made for AI will form the way forward for startup ecosystems. It additionally burdened the necessity to promptly set up AI-centric infrastructures and insurance policies to grab the forthcoming wave of development and innovation.
Entrepreneurial AI insurance policies are essential as AI has grow to be the principle driver of startup development in 2024, surpassing different sectors. Enterprise capital funding in AI and large knowledge (AI&BD) startups elevated by 33% final yr, making it the fastest-growing business. It additionally acquired the most important VC funding, accounting for 40% of all investments, up from 26% in 2021.
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