Arkam Ventures’ Rahul Chandra On ‘Middle India’, Voice AI And Investing In AI ...
On the sidelines of Arkam Ventures’ annual meet in Bengaluru, Managing Director Rahul Chandra spoke with BW Businessworld about how the firm’s early focus on “Middle India” is being reworked for an AI-first cycle. Chandra also shared his views on the rise of voice-led consumer AI, the maturing of fintech as an investment theme, and why AI infrastructure is emerging as a new area of interest for the venture firm. Excerpts:When you launched Arkam, you spoke a lot about “Middle India”. How has that thesis evolved since 2023, especially with changing macro conditions?
For us, “Middle India” has always meant the next 300 million consumers that are aspirational, underserved and outside the top tier. Initially, the assumption was that digital rails and smartphones would be the primary way to reach them, and that thesis still holds.
What has changed is the kind of products that can now be built. Earlier, it was largely fintech-led. Today, we’re seeing real traction beyond fintech such as in areas like skilling, education, health and consumer AI.
"Awareness among consumers has grown, Gen Z has become a spending cohort, and friction in consumption has reduced. Incumbents still struggle to serve this segment at scale, and that gap remains a big opportunity."
We are now backing companies in newer verticals. One unannounced investment, Vaya, operates in the astrology space, building an AI agent on top of existing LLMs that can hold natural, authoritative conversations. Another company is focused on livelihood skilling such as spoken English, interview skills, even how to ask for a raise. We are also seeing products being built entirely on voice, which would have been very different five years ago. Consumer AI, for us, is the new consumer internet.
Fintech funding has slowed sharply after a boom a few years ago. Is this due to lack of innovation or a shift in investor focus?
Fintech over the last four to five years was about building the base layer of financial products. Our own thesis was around fractionalisation, making asset classes accessible to Middle India. That’s why we invested in Smallcase for model portfolios and Wint Wealth for fixed income. These products weren’t accessible earlier.
A lot of that groundwork is now done. Adoption has been strong and will continue, but the number of new themes has reduced. We’re not keen to do more credit, savings, or equity platforms. The real shift we’re tracking is behavioural, such as how Gen Z, which dominates Middle India usage, thinks about wealth. They’re less savings-led and more interested in passive income. We’re watching closely to see how that translates into new product opportunities, especially with AI changing consumption patterns.
What does 2026 look like for Arkam in terms of fund deployment?
We’re actively investing out of Fund II. We have 14 investments so far, including two follow-ons in Fund I companies and 12 new companies. Of these, four are AI-first, four are in manufacturing, and the rest are in vertical AI and fintech-adjacent spaces. We continue to make about seven to eight investments a year.
Our average ticket size in Fund II is about USD 3.5 million, or roughly Rs 30 crore.
How do you view foundational AI versus applied AI, particularly in the Indian context?
We focus on areas where India has a natural advantage. Voice AI is a big one. India is a voice-first market, human interaction is the default here, unlike the US, which moved to IVR long ago. Products built in India are trained across languages, accents, and emotional diversity, making them inherently global.
We’re also seeing innovation in agent behaviour. Current LLMs are designed to be neutral and non-confrontational, but professional services need agents that speak with authority. Companies like Vaya are solving this at a fundamental level, and that innovation itself can become a platform.
“The third area is AI infrastructure, especially services around data centres”
With massive capex flowing into Indian data centres, there are several missing service layers. We’ve invested in this space and will announce it soon.
Is AI infrastructure where revenues will come fastest?
Not necessarily. Consumer AI is already monetising. Consumers are willing to pay for meaningful, personalised conversations with AI agents. That willingness to pay is a strong signal.
Where do you see India’s role in the global AI value chain?
India will play a role similar to what it did in global enterprise tech adoption. AI is now being adopted by enterprises worldwide, and Indian companies will help drive that adoption. Not necessarily at the infra layer, but in how agents are built, deployed, and scaled safely and securely.
This is a long-term play, but it mirrors how Indian services companies enabled global tech adoption in earlier cycles.
What does that mean for Indian IT services companies?
Some will adapt, some will struggle. AI adoption won’t need the same volume of human delivery. Services companies will have to evolve into AI-first delivery models, where agents do much of the implementation.
You’ll see Indian companies building enterprise-grade AI agents that are safe, secure and scalable. That’s something global enterprises can’t easily build in-house. That’s where India will show up strongly.
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