India’s first GenAI unicorn moves to cloud services as AI model ambitions face reality

Krutrim, India’s first GenAI unicorn, is moving away from AI model development to cloud services after months of relatively no product updates. This move reflects the difficult economic conditions for building large-scale AI systems.

Kultrim said on Tuesday that it is moving to cloud services, adding that the transition follows a complete review of its business in late 2025, including the reallocation of capital and talent and the suspension of chip design work. The update comes more than a year after the Bangalore-based startup released the Krutrim-2 base model.

The move follows a period of limited public activity for Krutrim, which has not made any major product announcements in recent months, with its last post about X dating back to December. The startup did not appear at any session at India’s AI Impact Summit in New Delhi, which was attended by global companies such as Anthropic, Google, and OpenAI.

In contrast, rival Sarvam participated in multiple sessions at the six-day AI event, showcasing new open source models, hardware developments, and commercial partnerships.

The changes follow a wave of job cuts at Kurtrim over the past year, with more than 200 positions cut in multiple rounds, local media reports said. The company removed the Kruti AI assistant app from its app store in April.

Founded by Babish Agarwal (pictured above), who also heads ride-hailing company Ola and EV maker Ola Electric, Kultrim initially positioned itself as one of India’s earliest GenAI candidates, aiming to build a domestic alternative to those from companies like Anthropic, OpenAI and Elon Musk’s xAI. The startup raised $50 million at a $1 billion valuation in January 2024, reflecting early investors’ enthusiasm for India’s homegrown AI ambitions, even though AI funding in India remains far less than in the US.

Kultrim said the company generated revenue of approximately 3 billion rupees (approximately $31.52 million) in fiscal 2026, a threefold increase from the previous year, and the first annual net profit and profit margin above 10%. The startup did not disclose how much revenue it generates from external customers compared to parent company Ola’s ecosystem. Previous reports indicated that about 90% of FY25’s revenue came from group companies.

But Kultrim said the company has more than 25 enterprise customers across sectors such as communications, financial services and healthcare, and demand for its AI cloud services is growing. He added that most of the company’s GPU computing power is already allocated to external workloads.

Sanchit Vir Gogia, principal analyst at Greyhound Research, said the move to the cloud made commercial sense, but cautioned that Kurtrim’s profitability claims needed to be tested. “The standard of evidence should improve with the claims,” ​​he told TechCrunch.

While Krutrim moves to cloud infrastructure, rival companies like Sarvam continue to release new AI models and partner with each other, including a recent partnership with space technology company Pixxel to develop an AI-driven orbital data center.

As Gogia points out, infrastructure may be a more viable strategy in the short term for the Indian AI market, although long-term ambitions to build competitive models persist.

Kurtrim did not respond to questions about its exact revenue mix, corporate customer base or recent reorganization.