ET Graphics: AI startups are still hot investment picks
Investments in
generative AI
startups continue unabated despite macro downturns and geopolitical tensions. Going by Pitchbook's latest report, 58% of the $73-billion global VC investments in the first quarter of 2025 was in AI startups.
ETtech
The
2025 Stanford AI Index report
says private AI investments increased 44.5% between 2023 and 2024. In addition, corporate investments in AI through mergers and acquisitions, minority stakes and public offerings have seen a 25.5% uptick in 2024 compared to in 2023. These investments stood at $19 billion in 2014. This has come on the back of rising adoption of AI as companies begin to see clear return on investments. Swathi Moorthy looks at how the AI investment landscape has changed in the past year in terms of investments and adoption.
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Time of India
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VCs love start-ups—But why are they turning away from MSMEs?
ETtech In FY24, India's VC funding returned to around $13.7 billion, a 1.4 times surge from the levels of 2023. Entrepreneurs in India's micro, small and medium enterprises (MSME) sector have been facing significant hurdles in accessing capital from traditional banking and institutional sources, primarily due to stringent eligibility criteria, high collateral demands, and complex application procedures. As a result, angel investors and venture capitalists (VCs) have emerged as key alternative options for the sector to address the funding gap. However, the penetration of angel investment and venture capital funds in MSMEs here lags global standards. According to experts and industry players, India's angel investment and venture capital ecosystem is still in its early stages, trailing global benchmarks in size, scope, and maturity. In 2024, less than 5% of India's 63 million MSMEs received equity funding, as per a report by the MSME Ministry. MSMEs in the country, particularly those in manufacturing and services, have been struggling with challenges such as low scalability, low digital penetration, and high-risk perception. With limited access to institutional capital, they primarily depend on self-financing or bank credit to overcome these Mittal, Founder & MD of Chandpur Paper, says India's MSMEs receive very little angel and venture capital finance, while technology-oriented start-ups get most of the FY24, India's VC funding returned to around $13.7 billion, a 1.4 times surge from the levels of 2023, as investors regained confidence and investments in the technology sector saw a jump, according to a report by global consultancy Bain & Company released earlier this year. Angel investments contributed $500-700 million during this period, but less than 10% went to traditional MSMEs. This highlights a significant funding gap for non-tech businesses. Echoing Mittal's view, Pushkar Mukewar, CEO & Co-founder of Drip Capital, says the Indian MSMEs face several challenges when seeking institutional or equity capital, including limited financial documentation, lack of formal credit history, low investor awareness about non-tech MSME sectors, and geographical disadvantages. 'Traditional VC or angel investors often see MSMEs as high-risk and low-return due to their fragmented and informal operations.'How the things can get better Jaydeep Birje, CEO of Leo Engineers, also believes that the government's efforts via Startup India, the SIDBI Fund of Funds, and the Credit Guarantee Scheme are slowly pushing the needle.'Some early-stage investors are also now expanding their scope beyond tech to more inclusive, impact-oriented MSMEs,' says emphasises that many MSMEs lack awareness and preparedness for equity funding. To boost access to funding, India needs to foster co-investment models, incentivise MSME-centric investors and develop digital matchmaking platforms. 'Mentorship and outreach in tier II and tier III cities can improve investor readiness. A focused ecosystem approach is essential to channel meaningful capital into this underfunded yet vital sector,' adds Singh, Founder & CEO of Quest OntheFRONTIER, notes that the landscape is evolving, and changes are already underway.'In 2025, angel investing in India is more structured and accessible than ever, driven by government initiatives like Startup India and the abolition of the Angel Tax (effective April 2025),' says Singh.A section of experts say that investors are now focusing on MSMEs with strong digital foundations, including robust online presence, e-commerce capabilities and technology adoption. This shift is driven by the recognition that digitally mature MSMEs are better positioned to scale and attract further funding. Additionally, the growth of angel networks and platforms has increased access to investors for MSMEs, including those in tier II and tier III cities, experts add. 'Multiple government schemes, such as the Startup India Seed Fund, MUDRA loans, and the Credit Guarantee Fund (CGTMSE), aim to provide MSMEs with access to capital, mentorship, and regulatory relief. The government is also encouraging sector-specific funds and Alternative Investment Fund (AIF) capital deployment into non-tech MSMEs. Exit pathways for VCs have improved, with streamlined M&A approvals and enhanced IPO regulations, increasing liquidity and making it more attractive for investors,' says Singh. According to Arvind Singh, India's MSMEs are poised for better access to angel and venture capital funding in 2025, driven by policy reforms, a thriving investor ecosystem and digital and technological readiness. While challenges remain—especially for non-tech MSMEs and those outside major urban centres—the overall trajectory is strongly positive, he Mukewar highlights that non-dilutive financing models are gaining popularity as a means to address the funding gap for MSMEs; options such as supply chain finance, invoice discounting, cash-flow-based lending, and marketplace seller financing are emerging as scalable solutions. 'These models leverage transaction data rather than collateral or credit history, making capital more accessible and relevant for MSMEs focused on exports, trade, or e-commerce. Scaling such fintech-driven models with supportive regulation and wider adoption can unlock meaningful capital access for India's MSMEs,' adds believes there is a need to increase awareness and improve access for MSMEs to various financing options. 'Some countries, like Singapore, set up MSME support centres in the industrial clusters. Second, the government should encourage and incentivise/subsidise the MSMEs to go digital and automate their business processes, leading to the formalisation of their financial operations and also improving productivity,' says suggests that finance providers, including banks and NBFCs, should leverage digital platforms and data-driven credit assessment tools and reach tier II and tier III cities and rural areas, thereby expanding funding access to MSMEs in underserved regions. This integrated approach can enhance efficiency, fairness, and inclusivity in MSME financing, says Singh.
Time of India
a day ago
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Foxconn looks to set up new Tamil Nadu unit to make iPhone enclosures
Taiwan's Foxconn is eyeing manufacturing iPhone enclosures in India and is looking at setting up a new unit within the ESR Industrial Park at Oragadam in Tamil Nadu for this purpose, people aware of the developments told ET. This would mark the Taiwanese contract manufacturer's foray into making enclosures in India, something that only Tata Electronics has been doing so far locally. Until now, Foxconn has focused on iPhone assemblies in India, harnessing its Sriperumbudur facility. ETtech by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like An engineer reveals: 1 simple trick to get all TV channels Techno Mag Learn More Undo However, the company is rapidly expanding the scope of work through its upcoming plant in Devanahalli, near Bengaluru. In addition to iPhone assembly, Foxconn also has a new unit in Hyderabad that is assembling AirPods. "Foxconn plans to start making enclosures in Tamil Nadu as they deepen their footprint in the country," one person cited above said. "Construction has begun for their enclosures unit at the industrial park. This will be a separate unit close to their upcoming display module assembly plant which is in advanced stages in the same industrial park." Live Events ETtech Discover the stories of your interest Blockchain 5 Stories Cyber-safety 7 Stories Fintech 9 Stories E-comm 9 Stories ML 8 Stories Edtech 6 Stories Analysts said Foxconn's entry into this space shows that Apple is looking to diversify its suppliers in India, much like in China where it has multiple vendors for different components. "This aligns well with Apple's broader strategy to derisk and diversify its supply chain," said Prabhu Ram, vice president, industry research group, CyberMedia Research. "As India emerges as a lynchpin in Apple's growth momentum — with early signs of an end-to-end manufacturing ecosystem taking shape — it is a natural progression for Foxconn to expand its capabilities and geographic presence by manufacturing enclosures." Queries sent to Foxconn and Apple remained unanswered as of press time Thursday. Sourcing depth Neil Shah, vice president, Counterpoint Research, also said Apple globally sources enclosures from multiple players and Foxconn is one of them. Hence, it was natural for Foxconn to diversify the production in India, Shah said. "This gives Apple more leverage and also provides Foxconn with ease of integration and boosts value addition," he said. "This improves supply chain effectiveness for Foxconn as well as Apple." He added that it was difficult to quantify value addition individually but for Apple specifically, Foxconn's value addition would be under 10%. Further, he said enclosures constitute a small percentage of Apple's Bill of Materials (BoM), roughly about 2–3%. So Foxconn's foray into enclosures will not significantly add to their value addition in percentage terms. It is, however, a significant move as Apple gradually increases its manufacturing presence in India. ET was the first to report on September 25 last year that Foxconn was looking to set up an assembly unit for smartphone display modules in Tamil Nadu, making it the first such facility catering to Apple. Later, on October 8, the Tamil Nadu cabinet cleared a Rs 13,180 crore investment by Yuzhan Technology (India), which is a unit of Foxconn. Sources had said at the time that Foxconn had picked up about 500,000 square feet at a plug and play facility at the ESR Oragadam Industrial & Logistics Park, which is right next to their smartphone assembly unit near Chennai. They added that the maker of the iconic iPhone is leaning in for a model wherein even other contract manufacturers — Pegatron or Tata Electronics, for instance — can use components from this unit rather than import modules that are assembled in China. On May 19, Foxconn said it was investing an additional $1.5 billion (about Rs 12,800 crore) in this unit via a London Stock Exchange filing. All of this expansion news comes on the back of Apple CEO Tim Cook's recent statements that India will become the primary manufacturing hub for iPhones sold in the US. "For the June quarter, we do expect the majority of iPhones sold in the US will have India as their country of origin," Cook said during Apple's Q1 earnings call on May 1. Tariff tribulations US President Donald Trump, however, has not taken kindly to Apple expanding its presence in the country and even threatened to have the company pay a 25% tariff if phones sold in the US were not made in the US on May 23. This tariff threat came a week after he said he had told Apple CEO Tim Cook not to build in India. "I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else. If that is not the case, a tariff of at least 25% must be paid by Apple to the US,' Trump wrote in a post on Truth Social. Foxconn plans for expansion, however, continue. The company has a huge factory coming up in Bengaluru and has a new unit in Hyderabad that is targeting AirPods — showing that the company is broadening its portfolio and venturing into other areas of production in India. ET had reported on March 30 that Foxconn is targeting producing 25-30 million iPhones out of their India facilities, which is more than double their production number from last year, as per sources.
