India's first GenAI unicorn shifts to cloud services as AI model ambitions face reality

Krutrim, India’s first GenAI unicorn, is shifting from AI model development to cloud services after months of relative quiet on product updates — a move that reflects the tougher economics of building large-scale AI systems. On Tuesday, Krutrim said it was moving toward cloud services, adding that the shift follows a business overhaul in late 2025 that included reallocating capital and talent and pausing chip design efforts. The update comes more than a year after the Bengaluru-based startupreleasedits Krutrim-2 base model. The move follows a period of limited public activity from Krutrim, which has not made any significant product announcements in recent months, with itslast poston X dating back to December. The startup did not appear in any of the sessions atIndia’s AI Impact Summitin New Delhi, where global players such as Anthropic, Google, and OpenAI took part. In contrast, rival Sarvam participated in multiple sessions at the six-day AI event, where it showcasednew open-source models,hardware developments, and commercial partnerships. The changes also come after a series of layoffs at Krutrim over the past year, withmore than 200 roles cutacross multiple rounds, according to local media reports. The startuppulled its Kruti AI assistant appfrom app stores in April. Founded by Bhavish Aggarwal (pictured above), who also leads ride-hailing firm Ola and EV maker Ola Electric, Krutrim had initially positioned itself as one of India’s earliest GenAI contenders, seeking to build domestic alternatives to models from companies such as Anthropic, OpenAI, and Elon Musk’s xAI. The startupraised $50 million at a $1 billion valuationin January 2024, reflecting early investor enthusiasm for India’s homegrown AI ambitions, even as AI funding in the country remains far smaller than in the U.S. Krutrim said it generated about ₹3 billion (around $31.52 million) in revenue in the financial year 2026, a threefold increase from a year earlier, along with its first annual net profit and margins exceeding 10%. The startup did not disclose how much of that revenue came from external customers versus its parent Ola’s ecosystem. Earlier reports had indicated thatabout 90% of its revenuein FY25 came from group companies. However, Krutrim said it is seeing growing demand for its AI cloud services, with more than 25 enterprise customers across sectors including telecom, financial services, and healthcare. It added that most of its GPU compute capacity is already committed to external workloads. Sanchit Vir Gogia, chief analyst at Greyhound Research, said the move toward cloud was commercially sensible, but cautioned that Krutrim’s profitability claims would need to be tested. “The standard of proof must rise with the claim,” he told TechCrunch. While Krutrim shifts toward cloud infrastructure, rivals such as Sarvam have continued to release new AI models and sign partnerships, including a recentone with space-tech firm Pixxelto develop an AI-driven orbital data center. As Gogia notes, infrastructure may be the more viable near-term play in India’s AI market, even as the longer-term ambition of building competitive models persists. Krutrim did not answer questions on its exact revenue mix, enterprise customer base, and recent restructuring.