Nearly 86% startups increase AI spend, says Elevation Capital report

At a time when artificial intelligence (AI) is shaping global conversations, a report by venture capital firm Elevation Capital offers a view into how the technology is being adopted and applied across India’s startup ecosystem. In its report, titled ‘The State of AI Adoption in Indian Startups’, which surveyed 200 startup founders, 83 per cent said they are more excited about AI than they were a year ago, while 86 per cent plan to increase investments in 2026.

 

In addition, more than half expect to double their spend, reflecting a strong and growing conviction in AI’s role in driving future growth. This momentum is also translating into structural changes, with nearly half of respondents indicating that they have initiated hiring freezes or are actively reducing team sizes in areas where AI adoption is most effective.

 

Snapshot of AI adoption amongst startups 

 

86%	Increase AI spend in 2026
47%	Freeze/reduce headcount
69%	Prioritise customer-facing AI features
75%	Consider boosting productivity using AI
43%	See bottom-up adoption by employees

 

Change in AI investments in next 12 months 

 

53%	Significantly increase (More than 2x)
33%	Slightly increase
10%	Remain about the same
4%	Decrease investment

 

Impact of AI adoption on businesses 

 

51%	Increased productivity
31%	Faster production/time to market
9%	Increased sales/conversion
5%	Reduced operational costs
3%	No measurable impact
2%	Improved customer satisfaction

  Current AI adoption status  

29%	AI is augmenting team, not replacing anyone
23%	Waiting to see productivity gains play out
17%	Increasing senior AI specialist hiring
15%	Hiring freeze in specfic functions
15%	Actively reducing team size by 10-20%