Building an AI startup in India isn’t exactly a walk in the park. Startup founders often feel frustrated due to a multitude of factors, such as limited funding, a lack of investor expertise, and the high demand for free proof of concepts (POCs). As it turns out, there are far deeper reasons for this.
Last week, Vishnu Ramesh, founder of Subtl.ai, posted a heartbreaking message on LinkedIn, signalling the end of the road for the company. “TL;DR: we have started shutting down Subtl.ai,” he wrote.
That one line of update confirmed what many in India’s AI startup ecosystem are increasingly confronting—ambitious ideas hitting a wall faster than anyone expects.
Subtl.ai, the Hyderabad-based enterprise GenAI startup, had carved out a niche in RAG and AI. With clients like SBI, defence contracts, two airports, and a few others, the company was trying to solve a hard problem—how to make enterprise data usable through natural language interfaces.
It had solid benchmarks as well. Ramesh said that their auto-tuning pipeline, Subtl V2, built by engineers and researchers at IIIT Hyderabad, outperformed RAG built on OpenAI and open-source embeddings by 15-20%.
In an interview with AIM earlier, Ramesh revealed that the startup’s ambition was to reduce the dependence on companies like OpenAI.
Furthermore, in a blog post last year, the startup revealed that SBI successfully implemented Subtl.ai, demonstrating 92% accuracy in information retrieval, and 56,570 minutes were saved (equivalent to approximately Rs 5 lakh).
The Promise was Real. The Traction, Limited
Ramesh is onto building another AI startup. “Going vertical AI this time,” he declared in his LinkedIn bio. Instead of blaming the market, customers, or the investors for the shutdown, he places the failure squarely on his own decisions, especially a lack of market focus.
Subtl chased use cases across vastly different industries, from banking to insurance to defence. Nothing was repeatable. “I got stuck handling customers from wildly different domains with wildly different use cases… customers gave no s*** about our other portfolio of work we had done,” he explained.
Despite early wins and a product reportedly called ‘Private Perplexity for Enterprise’, the startup was operating on thin fuel. It had raised around ₹1 crore in angel funding—barely enough to build and maintain a product in an increasingly competitive GenAI market.
There were no follow-up rounds, and no external signals of new revenue deals. Subtl built APIs that could have powered AI agents, citations, and document retrieval, but never invested in making those APIs developer-friendly.
“All we did was put a message on our website saying ‘yo reach out if you wanna use our APIs’,” he admitted. There were no open-source SDKs, no integrations with tools like LlamaIndex or Portkey, no real documentation, and no developer community.
According to Tracxn data shared with AIM earlier, over the last five years, 706 AI startups have failed, of which 54 are from India. This has been the case for several AI startups building for Indic use cases in the country, as there is not enough audience to actually test out use cases.
Read: Indic AI is Not Inspiring Enough for Indian Developers
“I’m a better CTO than a CEO,” Ramesh wrote. Lacking domain depth made enterprise sales difficult, and bouncing between industries didn’t help. One of the more painful parts of his reflection was about fundraising. He described how multiple investors had long conversations and seemed interested, but never followed through.
“Some investors flirt A LOT with founders,” he said. “But it doesn’t mean s*** until they give you a term sheet.” He made hiring and scaling decisions assuming money would come in, but it never did.
Yet, he didn’t paint himself as a victim. “It’s completely on me, I failed my team and investors more than they failed me,” he wrote. The domain is still up, the LinkedIn team profiles still say “Subtl.ai,” but the quiet exit has begun.
The Sad State of Affairs
Indian AI startups are walking on thin ice, almost all the time. Even though it might seem like the demand is increasing in the country, it is not exactly the case.
Similar to Ramesh, Vaibhav Domkundwar, CEO of Better Capital, earlier highlighted that a wave of frustration was sweeping through India’s AI and SaaS startup ecosystem, sparking what founders call the ‘Skip India Movement’.
There is a growing sentiment that Indian enterprises are not worth the time, effort, or resources required to sell to them.
Read: Free PoCs are Killing Indian AI Startups
Then there is the talent problem. “India seriously has a big f***ing talent problem,” said Umesh Kumar, co-founder of Runable, an Indian AI startup building a platform where anyone can build AI agents. “We got around 1,000 applications for a backend engineering role in just the last two to three days, and guess how many were actually decent?” Less than five.
Kumar’s startup was hiring backend developers with a no-nonsense offer: ₹50 lakh base pay, relocation, food, and a shot at working with top-tier talent. The hiring process involved a simple coding task, two calls and one paid trial.
And yet, his hunt continues.
Just a few months before Subtl.ai’s wind-down, Unikon.ai had a more chaotic departure. On March 1, 2025, multiple developers reported being asked to pack up and leave without a warning. Devices were returned, and offices were cleared. But the startup didn’t die.
It had raised $2 million from prominent Indian angels just nine months earlier and was initially pitched as a GenAI-enabled networking platform. But it soon pivoted into building a D2C skincare brand—a sharp detour from its original AI pitch. The result was a ₹2 crore per month burn rate and no follow-on funding.
The founder, Aakash Anand, shut down the company in a town hall meeting.
This is similar to what happened with InsurStaq.ai. In September 2024, the company started shutting down after one year of operations, and is now completely inoperative.
Some startups go to the US for quick monetisation and come back to solve the country’s problems, but AI, arguably, is too early for that. RevRag, a B2B agentic AI startup, decided to undertake this herculean task long ago and is now back in India selling AI to enterprises, even if the payoff takes a bit longer.
“We are not quitting India because we think India is a large market overall, even if it takes time. And we will be at it,” Ashutosh Singh, co-founder and CEO of RevRag, told AIM.
He acknowledged the challenges of selling in India. The sales cycle is slow, decision-making is layered with bureaucracy, and customers can go cold without a warning. “You might get ghosted, and you won’t even know. You’ll keep following up, but the deal might just disappear,” he explained.
The shutdown of Subtl.ai isn’t just a story of one startup’s stumble—it’s a mirror to the broader Indian AI ecosystem. A mix of premature scaling, fractured focus, lack of developer ecosystem thinking, and disillusioned investors is quietly draining momentum from startups that should be thriving.
While global AI companies ride waves of hype and capital, Indian founders are often left grappling with free POCs, flaky investors, and talent that can’t meet the bar. Some will regroup, like Ramesh, and build again—hopefully with sharper lessons. But for many others, the silence will be the final word.
The post Subtl.ai Collapse Exposes Cracks in India’s AI Scene appeared first on Analytics India Magazine.
