India’s first GenAI unicorn pivots to cloud services amid AI model challenges

India’s first generative AI unicorn, Krutrim, is making a strategic pivot from developing its own AI models to focusing on cloud services, a shift that underscores the harsh realities of building large-scale artificial intelligence systems. The Bengaluru-based startup announced Tuesday that it is moving toward cloud infrastructure after a business overhaul in late 2025 that involved reallocating capital and talent and pausing its chip design efforts. This update comes more than a year after the company released its Krutrim-2 base model, signaling a significant change in direction.

For months, Krutrim has been relatively quiet on product updates, with its last post on X dating back to December. The startup was notably absent from India’s AI Impact Summit in New Delhi, where global players like Anthropic, Google, and OpenAI participated. In contrast, rival Sarvam was highly visible at the six-day event, showcasing new open-source models, hardware developments, and commercial partnerships.

The pivot follows a turbulent period for Krutrim, which has conducted multiple rounds of layoffs over the past year, cutting more than 200 roles, according to local media reports. The startup also pulled its Kruti AI assistant app from app stores in April. Founded by Bhavish Aggarwal, who also leads ride-hailing firm Ola and EV maker Ola Electric, Krutrim had initially positioned itself as a homegrown GenAI contender, aiming to build domestic alternatives to models from Anthropic, OpenAI, and Elon Musk’s xAI. It raised $50 million at a $1 billion valuation in January 2024, reflecting early investor enthusiasm for India’s AI ambitions, even as funding in the country remains far smaller than in the U. S.

Despite these challenges, Krutrim reported about ₹3 billion (around $31.52 million) in revenue for the financial year 2026, a threefold increase from the previous year, along with its first annual net profit and margins exceeding 10%. However, the startup did not disclose how much of that revenue came from external customers versus its parent Ola’s ecosystem. Earlier reports indicated that roughly 90% of its revenue in FY25 came from group companies.

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. The company added that most of its GPU compute capacity is already committed to external workloads. Sanchit Vir Gogia, chief analyst at Greyhound Research, called the move toward cloud 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 like Sarvam have continued releasing new AI models and signing partnerships, including a recent deal with space-tech firm Pixxel to 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 about its exact revenue mix, enterprise customer base, or recent restructuring.