New Delhi: As India seeks to close the gap with AI leaders the US and China, early-stage AI startups are securing investment commitments faster, with term sheets arriving in as little as two weeks, compared with about a month previously, according to several industry executives.
The shift comes at a time when the country has seen a steady rise in funding in the artificial intelligence (AI) space, from $340 million in 2020 to $1.1 billion in 2025 and $1.4 billion so far this year, according to data platform Tracxn.
However, the time taken to raise capital varies depending on both the strength of the startup and its stage of development. For the strongest AI teams, particularly those led by founders with deep technical expertise and backed by real user adoption or early revenue, funding rounds that once took a quarter are now closing in just a few weeks. Larger rounds for growth-stage , however, can take longer to close, while early-stage companies with less proven products may also face longer timelines.
“At seed, what took three to four months a couple of years ago is now closing in three to five weeks for the strongest AI teams. We have seen term sheets land within 10 days of the first conversation,” said Kushal Bhagia, founder and partner at early-stage venture capital (VC) firm All In Capital.
For Naveen Murugan, co-founder and chief executive officer (CEO) of Creedom.ai, an AI-powered creative intelligence platform that raised around ₹4.1 crore in September this year, the term sheet landed in around two weeks. According to Murugan, the process now involves pitching the idea, followed by investors assessing the product, key company metrics and the market opportunity before deciding whether to invest. But that ‘yes’ or ‘no’ comes much faster than it used to. “Earlier, it could take months. Now, you typically get an answer within weeks,” he added.
One reason for the faster investment decisions is that the is changing so rapidly that investors cannot afford to wait a quarter or two before deciding whether to invest, analysts said.
For example, a startup may spend months building an AI feature for a particular use case, only for global giants such as OpenAI and Google to launch a similar feature. That can quickly erode the startup’s competitive edge or reduce what customers are willing to pay for its technology.
“It’s too late by then. If a company is not evolving for six months in this space, I think it will be dead, definitely,” said Chinmay Bhosale, co-founder of legal AI startup NYAI, which recently raised around $1.5 million ( ₹13 crore).
More competition
Another factor has been intensifying competition in the AI space, as more capital has also flowed into the sector. The number of AI funding rounds rose from 106 in 2020 to 186 in 2025, according to data platform Tracxn.
The rising competition has also increased the risk of investors missing out on promising companies. “Funds that wait for another quarter of data can either end up paying a significantly higher price or not get into the company at all. We are also seeing founders build and iterate much faster because the cost and time required to get an AI product into the hands of users has come down significantly,” Bhagia said.
However, experts argue that the faster pace of deal-making is not unique to AI. Similar patterns have emerged whenever a sector has attracted intense investor interest, with founders receiving term sheets—documents outlining the key terms of a proposed investment—and closing deals faster as investors compete to back promising companies.
“In that 2012 to 2014 era, we had this e-commerce wave. In 2015-16, we had a hyperlocal wave. In 2018, we had a content wave. Similarly, you keep seeing this happen. In 2021, we had a lot going on in edtech and also SaaS, where term sheets were being issued and signed very quickly across stages. Now, it’s happening for AI,” said Shivakumar Ramaswami, founder and managing director of Bengaluru-based investment banking firm IndigoEdge.
However, the same speed does not apply to larger funding rounds. “The speed of rounds is faster mainly at the early stages because the speed of development is pretty high. At the growth stage, I don’t think there’s much of a change because investors look at revenues, quality, diligence and growth models,” said Vikas Choudhury, founder and managing partner at growth-stage VC firm Playbook.
Investors, however, argue that faster term sheets do not necessarily mean doing away with due diligence.
“Retention is also more important to us than early revenue. In AI, early revenue can be generated relatively quickly through pilots. The real test is whether customers keep coming back. We would rather see 50 users who cannot do without the product than 500 who tried it once. Ultimately, the strongest are not just demonstrating what the technology can do,” Bhagia said.