Microsoft-backed AI4Bharat set to raise $12 million funding from Peak XV, Lightspeed - sources

FILE PHOTO: AI (Artificial Intelligence) letters and robot miniature in this illustration taken, June 23, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) - AI4Bharat, a start-up backed by Microsoft, is raising $12 million from venture capital firms Peak XV and Lightspeed Venture to develop artificial intelligence-powered chatbots for Indian languages, according to three people familiar with the matter.

The larger-than-usual seed funding round underscores the growing interest in generative AI, after OpenAI's ChatGPT dazzled users with its ability to engage in human-like conversations. Most seed rounds are usually up to $1 million to $2 million.

AI4Bharat, which is also backed by the Indian government, has been developing AI models for speech recognition and translation. It unveiled in May a mobile assistant that aims to make information on government schemes accessible in multiple languages.

The funding will be used to train its models on more data, an expensive endeavor for AI ventures, and create conversational bots through partnerships with government agencies, the sources said.

AI4Bharat, Peak XV and Lightspeed did not immediately respond to Reuters' requests for comment.

Incubated at the Indian Institute of Technology in Madras and supported by a grant from Infosys co-founder Nandan Nilekani, AI4Bharat is also working with payments agency National Payments Corp of India to develop systems for voice-based payments on feature phones.

The investment is among the first from Peak XV Partners after rebranding from Sequoia Capital India and SEA following a split with its U.S.-based parent fund last month.

Peak XV's other AI investments include voice assistant firm AI Rudder, computer vision firm Mad Street Den and enterprise marketing platform Insider, according to its website.

The buzz around generative AI among both consumers and businesses has helped related start-ups draw funding even as an uncertain economy saps investments for other companies.

Indian AI start-ups have raised $583 million this year, as of June, according to data from Venture Intelligence. They raised a total of $2.45 billion last year.

(Reporting by Yuvraj Malik in Bengaluru)