Why are startups taking longer to go beyond seed funding? RTP Global’s Garg explains
Bengaluru: Seed funding for startups has held up better than the overall financing since the 2021 boom cooled. But Nishit Garg, a partner at global venture capital (VC) firm RTP Global, says the real bottleneck has shifted to the next phase.
The reason: artificial intelligence (AI) has shrunk timelines, but it is taking longer to win customers.“I don’t think the seed stage is in bad shape today,” Garg said. “After 2023 second half, things started recovering.
And today there is a lot of seed activity.” The bigger problem, he said, is that "companies maturing from early stage (Series A and B) and beyond–that has gone slower".While overall startup funding in India has stayed well below the 2021 peak, seed and early-stage funding have been relatively more stable in recent years. According to Tracxn, seed-stage funding fell from its 2021-22 peak of $2 billion in 2021 and $2.2 billion in 2022 to $1.4 billion in 2023, before recovering to $1.5 billion in 2024.
It then slipped again to $1.1 billion in 2025.Early-stage funding, which includes Series A and Series B rounds, also fell sharply from $7.5 billion in 2021 and $6.6 billion in 2022 to $3.5 billion in 2023, but recovered gradually to $3.7 billion in 2024 and $3.9 billion in 2025.Seed funding is the first official equity financing to prove the business model. A and B rounds are typically used to fund initial growth once the business model is proven.That gap is becoming more visible as startups build products faster, helped in part by artificial intelligence (AI) tools and lower development timelines, but still take longer to win customers and scale go-to-market.
Read on livemint.com