India’s startup ecosystem is witnessing a major shift, with over 70% of startups now integrating artificial intelligence (AI) into their core business operations, according to a new Meta-commissioned report released in collaboration with Alvarez & Marsal India (A&M India).
The report, based on insights from 100 high-growth startups, highlights six key growth drivers: AI adoption, cross-border expansion, omnichannel presence, Tier 2/3 market penetration, category diversification, and creator-led brand building.
AI boosts efficiency in Marketing & Customer Service
According to the report, 87% of AI adopters in the startup space reported a 30% improvement in cost per acquisition.
Startups across healthcare, beauty, and edtech are leading the way in using AI for customer service, automation, predictive analytics, and personalisation.
Meta noted that startups are increasingly deploying AI to optimise both internal workflows and consumer-facing touchpoints, streamlining operations and enhancing user experience.
Omnichannel models gain ground
Around 67% of surveyed startups now follow an omnichannel strategy to understand how consumers switch between online and offline touchpoints.
The report shows that the consumer journey often begins digitally — through ads, WhatsApp promotions, and creator-led Reels — and then shifts to physical retail, particularly in categories like home décor, fitness, and fashion.
Tier 2 and 3 markets emerge as growth hotspots
Startups are now expanding their reach beyond metropolitan areas. Meta said that demand-driven Tier 2 and Tier 3 cities are increasingly being targeted, with service-oriented startups entering these regions about a year after product-based companies.
This shift reflects growing digital penetration and consumer affluence in smaller cities, offering startups new revenue potential and scalable opportunities.
The report finds that 52% of Indian startups are exploring or actively pursuing international expansion. Startups are driven by the lure of larger total addressable markets, seeking to take their products and services beyond domestic boundaries.
This trend also reflects growing global confidence in Indian innovation and business models.
Category diversification gains momentum
In a bid to deepen consumer engagement and unlock new revenue streams, 84% of startups are now looking beyond their core offerings, according to the study.
Startups are relying heavily on digital tools such as social listening, keyword tracking, and marketplace analytics to identify high-potential adjacent categories.
Meta emphasised that category expansion has become a strategic growth lever, helping startups remain competitive in a saturated market.
The report also highlights the growing trend of creator-driven marketing, where startups increasingly collaborate with influencers and content creators to build brand awareness and trust.
These partnerships are proving especially effective in early discovery phases and driving high engagement across platforms.
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