Even as artificial intelligence dominates investor conversations, Indian startup founders are striking a more cautious note—calling AI overhyped and pointing to manufacturing as a stronger long-term opportunity.

A survey by InnoVen Capital, based on inputs from over 100 founders, found that only 31% expect AI to significantly impact their business models in the next two to three years. Meanwhile, manufacturing emerged as the most underappreciated sector. This reflects confidence in India’s industrial and deep-tech potential.

InnoVen Capital Managing Partner Ashish Sharma said the findings highlight a gap between AI hype and real adoption in India. He noted that AI still accounts for a small share of startup funding compared with Silicon Valley.

At the same time, advanced manufacturing, defence, and aerospace are attracting growing investor interest. This is happening as India looks to build capabilities in critical technologies. However, Sharma said it is still early days.

Funding trends are unlikely to shift sharply in the near term. Fintech and consumer startups are expected to remain the top recipients of capital. Even as focus shifts towards deep tech gradually, this trend should continue.

The survey also shows improving fundraising sentiment, with 85% of founders optimistic about funding in 2026. Alongside this optimism is a stronger IPO pipeline that signals a maturing startup ecosystem.

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