India’s ambition to build globally competitive foundational AI firms is constrained by the migration of top talent to Silicon Valley and a scarcity of large-scale risk capital, Menlo Ventures partner Deedy Das said at The Economic Times World Leaders Forum 2026 in New Delhi.
- Top AI research talent largely based in San Francisco
- Indian investors hesitant on high-risk foundational AI funding
- Application-layer AI seen as a viable growth area for Indian startups
What happened
Deedy Das, partner at Menlo Ventures, detailed India’s struggle to cultivate foundational AI companies globally competitive with US firms during The Economic Times World Leaders Forum 2026. He noted that many leading AI researchers prefer career opportunities in San Francisco at firms like OpenAI and Anthropic, which offer significantly higher financial upside and resources.
Menlo Ventures, an early backer of Anthropic, has invested heavily in foundational AI startups, reflecting the immense capital required to develop advanced AI infrastructure. Despite this, Indian investors remain cautious about making the large, risky bets needed at the model-building level.
Why it matters
The concentration of AI research talent and venture capital in Silicon Valley creates a challenging environment for Indian foundational AI startups to compete on a global scale. Without access to substantial funding and world-class researchers, India may fall behind in shaping core AI technologies that drive future innovation.
However, Das indicated that India holds promising opportunities in AI applications and services that build upon foundational technologies. Companies in this space can leverage growing global infrastructure investments and are more likely to succeed by focusing on solutions rather than foundational research.
What to watch next
Industry observers should monitor how Indian startups pivot towards application layer AI and whether new initiatives emerge to retain top AI talent domestically. Strategic partnerships with established US AI firms and cloud providers may become essential for Indian companies aspiring to scale.
Menlo Ventures’ ongoing investments, such as in OpenRouter—a platform connecting developers to multiple AI models—showcase viable models for India-based AI businesses. The sector will also be shaped by upcoming IPOs like Anthropic’s, which could reset valuations and investment appetite for foundational AI globally.