The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Ujjaini Dutta

BENGALURU, June 17 (Reuters Breakingviews) - Its purchase of a 10% stake values posterchild startup Sarvam at $1.5 bln. The IT firm's cheque is small enough to limit risk yet showy enough to deflect criticism its industry is underinvesting as AI erodes revenue. It could also unlock government work and spur peers to follow.

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CONTEXT NEWS

HCLTech will acquire a 10.5% stake in Sarvam AI for ‌14.27 billion rupees ($150.7 million) in cash, the Indian IT services company said in a stock exchange filing on June 15. HCL co-led the fundraising round with Bessemer Venture Partners. It also included existing investors Khosla Ventures and Peak XV Partners.

The investment will allow the Indian IT services company to develop specific language models and AI solutions for its global client base and accelerate the development of sovereign AI solutions for governments and regulated industries, HCLTech said.

Sarvam was valued at $1.5 billion in the round, which raised $234 million in its first close out of a targeted $300 million. The AI startup is backed by India's government AI Mission.