The AI startup ecosystem is showing an interesting paradox: new companies are increasing, yet overall fund flows are down from their earlier peaks. According to Forbes India’s latest graphic, 379 AI startups were founded in 2024 an all-time high in terms of startup count. This comes even as total capital raised in the sector has dropped, especially compared to the boom years like 2022.
What this suggests is a shift: investors are becoming more selective, focusing on fewer deals, likely demanding stronger traction, clearer business models, or more innovation. Not every startup is getting big checks; funding is concentrated. For founders, the implication is that ideas alone won’t be enough they need solid execution, differentiation, and efficient use of capital.
From a market-health perspective, this could be positive less hype, more discipline. But it also risks making it harder for ambitious but early-stage or experimental startups to get off the ground. Ultimately, the growth in number of startups amid lower funding seems to be a signal that the AI space is maturing.
