86% of Startups Plan Higher AI Investment as Focus Shifts to Execution: Report
Engineering teams are leading the way, with 85 percent of their AI initiatives already in production.
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Indian startups are preparing to significantly step up their investments in artificial intelligence (AI), with a strong majority planning higher spending in the coming year. A new study indicates that 86 percent of startups intend to increase their AI budgets in 2026, reflecting growing confidence in the technology’s role in driving business outcomes. Many of these companies are also expecting sharp year-on-year jumps in spending as AI moves from experimentation to core operations.
According to Elevation Capital’s report, The State of AI Adoption in Indian Startups 2026, the shift marks a turning point in how startups approach AI adoption. The study, based on insights from over 200 founders and functional leaders, highlights how companies are embedding AI into workflows and decision-making rather than limiting it to isolated use cases. The findings also point to broader changes in hiring strategies, team structures, and functional priorities.
The report notes that 83 percent of founders are more optimistic about AI compared to a year ago, while more than half expect to double their investments. This rising confidence is already influencing workforce decisions. Nearly half of the respondents said they have implemented hiring freezes or are reducing team sizes in areas where AI can handle repetitive and process-driven tasks. Companies are becoming more deliberate in hiring, focusing on roles that complement AI capabilities.
However, adoption is not uniform across all functions. Engineering teams are leading the way, with 85 percent of their AI initiatives already in production. In contrast, departments such as sales, finance, and human resources are still exploring practical applications. This gap suggests significant untapped potential for AI beyond technical teams, particularly in business-facing roles.
Vartika Bansal, AI Operations Partner at Elevation Capital, said, “Over the past year, we have seen a clear shift from curiosity to conviction when it comes to AI adoption in Indian startups. What is particularly interesting is that this change is being driven from within teams, as individuals integrate AI into their everyday work.” She added, “While engineering has moved the fastest, the next phase of impact will come from broader adoption across business functions.”
The study also highlights a cultural shift, with resistance to AI largely fading. Employees are increasingly driving adoption themselves, often integrating AI tools into daily workflows even before formal company strategies are in place.
As startups look ahead, the biggest opportunity lies in scaling AI use across non-technical functions to unlock organization-wide value and productivity gains.
Indian startups are preparing to significantly step up their investments in artificial intelligence (AI), with a strong majority planning higher spending in the coming year. A new study indicates that 86 percent of startups intend to increase their AI budgets in 2026, reflecting growing confidence in the technology’s role in driving business outcomes. Many of these companies are also expecting sharp year-on-year jumps in spending as AI moves from experimentation to core operations.
According to Elevation Capital’s report, The State of AI Adoption in Indian Startups 2026, the shift marks a turning point in how startups approach AI adoption. The study, based on insights from over 200 founders and functional leaders, highlights how companies are embedding AI into workflows and decision-making rather than limiting it to isolated use cases. The findings also point to broader changes in hiring strategies, team structures, and functional priorities.
The report notes that 83 percent of founders are more optimistic about AI compared to a year ago, while more than half expect to double their investments. This rising confidence is already influencing workforce decisions. Nearly half of the respondents said they have implemented hiring freezes or are reducing team sizes in areas where AI can handle repetitive and process-driven tasks. Companies are becoming more deliberate in hiring, focusing on roles that complement AI capabilities.
