India's technology ecosystem has dramatically closed the innovation gap with Silicon Valley in the critical field of artificial intelligence, now lagging by just six months to a year instead of a decade, according to a leading venture capital investor. This seismic shift is empowering Indian founders to aim for global leadership rather than settling for secondary positions.
From a Decade Behind to Months: The Rapidly Closing AI Gap
Krishna Mehra, the AI partner at Elevation Capital, stated in an interview from San Francisco that the historical lead once held by the US tech hub has nearly evaporated. "In the SaaS days… SF was maybe 10-plus years ahead in AI," Mehra observed. "We've narrowed the gap significantly… maybe we are six months behind in India or one year behind." This marks a profound reduction from previous technology waves and signals a new era of competitiveness for tech hubs in Bengaluru and across India.
Mehra, an alumnus of IIT Kharagpur and co-founder of Capillary Technologies and Taro, joined Elevation Capital in 2024 to strengthen the firm's cross-border focus between India and the United States. His analysis points to a fundamental change in how products are being conceived in the AI cycle.
Building from First Principles: A Unique Opportunity for Indian Founders
The core opportunity, Mehra explains, stems from AI enabling a complete rebuild of products "from first principles" instead of making incremental upgrades to old software. Earlier, Indian companies could follow established global blueprints and later scale their market approach. Now, with AI-native software, user workflows and core capabilities can transform every few months, making rapid, direct market feedback essential for survival and success.
"Products can be rethought completely," Mehra said, contrasting this with shifts like moving from on-premise to cloud computing, where basic interfaces remained similar. This fluid environment demands that founders iterate their products at breakneck speed in close consultation with their target end-users.
Founder Geography Shifts: Earlier Moves to the US for Validation
This new paradigm is also altering the traditional geography of startup building. While India's deep tech talent pool allows founders to develop initial concepts quickly, Mehra notes that many teams are now relocating to the United States much earlier—"pretty much at a pre-seed level." The goal is to validate and refine their business thesis by immersing themselves in global customer communities and Silicon Valley's dense network.
Describing the Valley's ecosystem, Mehra highlighted the "crazy" number of meetups, AI sessions, and mixers, along with an unparalleled "talent density." He emphasized a culture of openness where "people will open their doors" for a compelling idea, enabling startups to work intimately from customer locations and accelerate learning.
Mehra's investment thesis is built on the conviction that India now possesses stronger ingredients for creating globally dominant companies than it did ten years ago. These ingredients include:
- Deeper product and technical talent
- A better grasp of global go-to-market strategies
- More sophisticated local enterprise customers, even with lower willingness to pay than the US
- Increased availability of risk capital
- Heightened ambition among founders
"If those ingredients are there, can we build some category defining companies? Absolutely," he asserted, challenging the ecosystem to target "global number one" outcomes.
Navigating a Fast-Evolving Market: Durability is Key
Mehra also cautioned about the volatile nature of the AI market, where competitive dynamics in sectors like software engineering tools can flip rapidly as model providers evolve. The critical question for both investors and founders, he said, is whether an application's value is solely derived from the underlying AI model or if it can create a durable, differentiated advantage at the application layer over time.
This new, narrow gap with the global frontier presents an unprecedented moment for Indian entrepreneurship. The message from the frontlines of venture capital is clear: the time for building global category leaders from India is now.
