Early-stage artificial intelligence (AI) startups in India are securing investment commitments at a significantly faster pace, with term sheets now arriving in as little as two weeks, compared to about a month previously. This shift is occurring amid a surge in funding for the AI sector, which has risen from $340 million in 2020 to $1.4 billion so far in 2026, according to data from Tracxn.
The rapid pace of investment is driven by the need for speed in a sector where global advances can quickly render a startup's product or competitive advantage obsolete. Investors are now making decisions in weeks rather than months, as the AI landscape evolves at an unprecedented rate. For instance, Creedom.ai, an AI-powered creative intelligence platform, secured a term sheet within two weeks, raising approximately ₹4.1 crore in September.
Kushal Bhagia, founder and partner at All In Capital, noted that the strongest AI teams, particularly those led by founders with deep technical expertise and early revenue or user adoption, are closing funding rounds in just a few weeks. He highlighted that what once took three to four months at the seed stage is now being completed in three to five weeks.
Chinmay Bhosale, co-founder of legal AI startup NYAI, which recently raised around $1.5 million (₹13 crore), emphasized the necessity of rapid evolution in the AI space. He warned that a company not evolving for six months could face obsolescence.
The competitive nature of the AI sector is another factor accelerating investment decisions. The number of AI funding rounds increased from 106 in 2020 to 186 in 2025. This heightened competition means investors risk missing out on promising startups if they delay their decisions. Bhagia pointed out that funds waiting for additional data might end up paying a higher price or missing out entirely.
However, the trend of faster deal-making is not unique to AI. Shivakumar Ramaswami, founder and managing director of IndigoEdge, noted similar patterns in other sectors that have attracted intense investor interest. He cited the rapid issuance of term sheets during the e-commerce wave of 2012-2014, the hyperlocal wave of 2015-16, and the edtech and SaaS boom in 2021.
Despite the speed at early stages, larger funding rounds for growth-stage startups still require more time. Vikas Choudhury, founder and managing partner at Playbook, explained that growth-stage investments involve thorough evaluations of revenues, quality, and growth models, which naturally take longer.
Investors maintain that expedited term sheets do not equate to skipping due diligence. Bhagia stressed the importance of customer retention over early revenue, noting that while early revenue can be generated quickly through pilots, the true measure of success is whether customers continue to use the product. He emphasized that the strongest AI companies demonstrate not just technological capabilities but also sustained user engagement.
