HCLTech bets on Sarvam AI, to invest $150 million at $1.5 billion valuation

Homegrown AI startup, Sarvam AI, is reportedly getting a big push from HCLTech with an expected investment of $150 million. This comes at a time when the Indian IT sector is facing fears of a SaaSpocalypse from AI.

In Short

• A legacy IT services firm is preparing a rare frontier AI bet
• Bessemer and Nvidia-linked investors are also expected to join the round
• The proposed fundraise could value Sarvam AI at about $1.5 billion

The Indian IT sector has so far been cautious of AI. Be it TCS, Infosys, Wipro, almost everyone has faced fears of a SaaSpocalypse whenever a company like Anthropic has released new features. But now, HCLTech, another major Indian IT firm, is reportedly planning to invest in Indian AI startup Sarvam AI.

As per a report from Moneycontrol, HCLTech will lead an upcoming funding round of Sarvam AI, where the Indian IT firm could invest $150 million at a $1.5 billion valuation. Sarvam is also expected to raise another $150 million during this round, with Nvidia also rumoured to be in the running.

This round will mark the first funding round for Sarvam in over two years. The company last raised $41 million in a Series A round in December 2023.

Sarvam AI to get investment from Indian IT

If the funding round goes through, it would mark a noticeable shift in the Indian tech sector, as a legacy Indian IT company bets on a homegrown AI startup. It would also make it one of the biggest fundraises by an Indian AI start-up.

Do note that Sarvam has been working on homegrown AI models for some time now. The Bengaluru-based startup has previously defeated the likes of ChatGPT and Google Gemini in certain tasks with its Vision and Bulbul models.

The investment comes at a time when the Indian IT sector is dealing with rapid changes driven by AI-native companies, such as Anthropic and OpenAI. This has previously created uncertainty over the future of SaaS due to tools like Claude Cowork.

Though, HCLTech itself has a deal with OpenAI to help implement AI tools across clients systems, something that seems to be becoming increasingly important right now. As OpenAI and Anthropic now have their own AI service companies. The likes of TCS and Infosys also have similar deals.

Keep in mind that previously Indian service companies have faced criticism for not investing in AI. And now, Anthropic, a company that was founded in 2021, has a valuation higher than the top 4 Indian IT firms.

What is Sarvam AI?

Sarvam AI was founded in July 2023 by Vivek Raghavan and Pratyush Kumar. The startup aims to be a full-stack sovereign AI company focused on building foundational models, or core AI systems that can be adapted for multiple uses, for India.

Sarvam AI has focused on Indic-language AI and voice-based applications for Indian users and enterprises, alongside an enterprise platform for building and deploying AI applications.

At the IndiaAI Impact Summit earlier this year, it unveiled two open-weight large language models, which are AI systems trained on vast amounts of data to understand and generate text, including 30-billion and 105-billion-parameter models trained from scratch in India. Sarvam also showcased AI-powered smart glasses at the event, which were also worn by Prime Minister Narendra Modi.

In February, the company rolled out the Sarvam Indus mobile app for users in India. Though it is currently in beta.

- Ends