Indian venture capital firm Together Fund announced a $150 million early-stage fund to back AI companies, aiming to capitalize on use of the technology in the software-as-a-service market.

The fund is Together’s second and will support seed and Series A companies with as much as $5 million in capital apiece. Its first fund — with $85 million initially in 2021 — has backed 20 software-as-a-service companies, picked from over 1,700 startup pitches in segments like recruitment, security and health care.

“Generative AI has unleashed an AI adoption wave that’s far bigger than the cloud services wave,” said Manav Garg, founding partner of Together and co-founder of Eka Software Solutions.

“AI adoption could create $7 trillion in global economic growth over the next 10 years, as Goldman Sachs says, and native AI startups will fuel enterprise adoption of AI,” Garg said in a phone interview from Bangalore.

Generative AI, the technology used in chatbots such as OpenAI Inc.’s ChatGPT, is rapidly spreading through the business world, where it has the potential to automate tasks and improve customer service.

With millions of software developers and more than 3,500 SaaS startups already generating $7 billion in revenue, India is well poised to seize the AI opportunity, Garg said.

Despite a slowdown in venture funding, AI companies are being started at a healthy pace. Bangalore-based Together has backed three of them in the last three months alone, he said.

“The bright spot ahead in the business landscape is AI,” Garg said. All 20 companies the fund has invested in so far have a big component of or are incorporating generative AI, he said. Together is receiving at least 17 to 20 business plans from founders each month, he said.

(Updates with partner’s comments starting in third paragraph.)