Bengaluru, March 12 -- 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 fund...