India’s Startup Ecosystem Booms with AI - Meta-Alvarez & Marsal Report

India’s startup ecosystem has experienced exponential growth over the past decade, fueled by early-stage funding, growing digital adoption, and increasing consumer affluence across both metropolitan and non-metropolitan regions, according to a new report released jointly by Meta and Alvarez & Marsal India.

• Over 70% of startups are now integrating AI across core business functions.
• 67% startups have adopted omnichannel models to address modern customer journeys that span online discovery and offline purchase.
• Nearly all startups are expanding into Tier 2/3 markets to cater to high demand and existing supply gaps.
• 52% of startups are expanding cross-border, tapping into large addressable markets and global demand for Indian-origin products.

The study, based on insights from 100 high-growth startups, identifies six key levers driving the next phase of startup evolution in India:

1. AI adoption

2. Cross-border expansion

3. Omnichannel presence

4. Tier 2/3 market expansion

5. Category diversification

6. Creator-led brand building

AI Adoption Gaining Ground Rapidly

Artificial intelligence is emerging as a transformational force for Indian startups. Over 70% of the startups are actively integrating AI into their operations. In marketing specifically, 87% of AI adopters reported up to 30% improvement in cost per acquisition, underlining AI’s efficiency and impact.

Sectors such as healthcare, edtech, and beauty are leading in AI maturity, using tools for automation, personalized customer interactions, and predictive analytics.

"In today’s dynamic times, startups that think smart and act fast to evolve will lead the charge," said Sandhya Devanathan, Vice President, India and South East Asia, Meta.

Omnichannel and Tiered Expansion on the Rise

The report also highlighted that 67% of startups have adopted omnichannel strategies, reflecting a consumer journey that often begins online—through digital ads, creator-led Reels, or WhatsApp—and concludes in offline retail, particularly in categories such as fashion, fitness, and home decor.

Meanwhile, Tier 2 and Tier 3 cities are fast becoming critical growth markets, with startups entering these regions earlier than before. Service-led startups, in particular, are leveraging vernacular content, regional influencers, and WhatsApp commerce to penetrate these emerging zones.

"We’re seeing a significant shift in how Indian startups think about scale—not just growth but sustainable value creation," said Himanshu Bajaj, Managing Director and Head of Alvarez & Marsal India and GCC.
"What stands out is how early-stage startups are applying these levers with surprising sophistication."

Global Expansion No Longer a Late-Stage Strategy

Advertisment

The report notes that 52% of surveyed startups are now exploring or operating in cross-border markets, driven by the search for larger total addressable markets and rising international demand for India-origin products and services.
The US, UAE, and UK emerged as the top destinations for these global expansions.

The study reinforces the idea that India’s startup ecosystem is not just scaling rapidly but evolving strategically, embracing technology, regional reach, and global vision to create long-term impact.

Startup Funding News: Your Gateway to Every Funding Update.

Latest Startup News: Stay updated with the latest startup news and trends. Your go-to source for startup ecosystem updates.

Startup Stories: Discover inspiring tales of startups overcoming challenges, and achieving success.