While there are no concrete investment offers on the table yet for the next round, Krutrim, led by its founder Bhavish Aggarwal, is “confident of bringing multiple big-ticket investors to the cap-table” in the coming months, these people said on the condition of anonymity.
Goldman Sachs, JP Morgan and SBI Capital Markets are the bankers involved in the funding round, one of the persons cited earlier said, adding that Krutrim will raise funds in a mix of debt and equity.
The three banks did not respond to Mint’s emailed requests for comment. An Ola spokesperson said the company “does not comment on speculations.”
Mint could not independently ascertain the valuation being sought by Aggarwal for the latest funding round from investors.
Read more: NRAI contests exclusion from CCI confidentiality ring in Zomato antitrust probe
Matrix Partners, which initially led Krutrim’s first $50-million funding round, is said to be contributing $25 million more in the upcoming round, the second person said. “The company is speaking with a number of top venture capital funds outside of India for additional capital—basing their pitch upon developing indigenous infrastructure and artificial intelligence models. No deal has matured yet,” they said.
The third person added that the company’s $500-million funding push “was a part of Aggarwal’s effort to complete the $1 billion fundraise before his deadline. That didn’t exactly work out.” Aggarwal announced in February that Krutrim will attract investments amounting to over $1 billion by 2026.
Krutrim, unveiled on 15 December 2023, is Aggarwal’s moonshot AI project that has claimed it will build foundational models for Indic languages, as well as India’s own graphic processing unit (GPU) chip, to make its own data centres and AI ecosystem. Krutrim is sanskrit for the word ‘artificial’.
On the 42nd day after the announcement, Aggarwal claimed to have raised $50 million for Krutrim at a valuation of $1 billion. On 4 February this year, Aggarwal claimed to have invested $230 million in Krutrim. This came after Aggarwal pledged about 8% of his shareholding in publicly-listed Ola Electric to raise debt to finance Krutrim’s expansion.
The funding round could be a key part of Ola’s claim to “make India independent of depending on Western companies for AI,” as per Aggarwal’s statement on 15 August 2024. However, the company is yet to showcase the efficacy and veracity of its work at scale—something that investors and sectoral consultants said could be difficult.
Read more: For the first time, India to make most of a laptop in-house
“Ola is yet to release any peer-reviewed journal on its AI development, or showcase any product implementation at scale to build any kind of investor confidence. There are also major concerns that AI ventures do not necessarily need large funds as the cost of computing reduces, and India focuses on AI applications. Venture capitalists are also cautious as AI continues to change in terms of its fundamental nature, every few weeks. None of this would favour Ola’s push for a massive funding round,” said Jayanth Kolla, partner at technology consulting firm Convergence Catalyst.
Brain drain at Krutrim
Meanwhile, Krutrim continues to lose senior engineers from its AI development. A senior industry executive with direct knowledge of the matter said that Krutrim “is yet to show why it needs sweeping funds to build any AI patent close to being comparable with OpenAI, Meta or Google.”
“In fact, at this moment, multiple executives including senior ones have left the core Krutrim engineering team that is led by Sambit Sahu,” the industry executive said.
When contacted directly, Sahu did not respond to Mint’s request for an interview.
To make matters worse, India’s investors are not convinced about signing on large cheques to the scale of Aggarwal’s demand. “The investors that can offer such large amounts in funding are all based outside of India. But, the large VCs are focused on personalities who stand out with a world-leading pedigree of AI storytelling and product development. For Aggarwal, this is more difficult to pull off since his core competencies are not in AI,” said Kashyap Kompella, AI consultant and chief executive of RPA2AI.
Kolla said that relying on SoftBank’s Masayoshi Son—who has backed Ola before—may be out of the question “since Son is focused on pooling in his funds for the US’ Stargate AI initiative.”
Read more: SoftBank’s Masayoshi Son is making big bets, leaning heavily on borrowing
Such a move could hurt Ola’s efforts to achieve its funding goal. Kompella added that the current macroeconomic environment “is not going to help either.”
“At this moment, Donald Trump’s trade tariffs are causing widespread uncertainties—with the markets fluctuating wildly. When there is business uncertainty, the first thing that is hit is dealmaking. Large funding efforts will thus be only concentrated around a few executives such as Mira Murati (of the OpenAI founding team), who stand out as veterans in the global AI industry, and smaller ventures without a clear-cut sector expertise may struggle to raise massive funding rounds,” Kompella emphasized.
The fundraising attempt from external investors comes at a time when Ola Electric is facing concerns over profitability and regulatory practices. Currently, it is facing questions from the Union ministry of road transport and highways and Ministry of Heavy Industries over the gap in its sales and registration numbers in the month of February.
The government is also questioning the company’s servicing capacity after thousands of consumer complaints emerged against its flagship electric scooters.
Since debuting at the public markets in August last year at ₹76, its stock has lost more than 30%. From its peak, the share price has lost over 65% value in the past 9 months.
On Thursday, Ola Electric’s stock closed little changed at ₹50.24 on the BSE.
(With Inputs from Sneha Shah)
Source:https://www.livemint.com/companies/ola-bhavish-aggarwal-ai-venture-krutrim-funding-round-investment-investors-11745151929400.html