Elevating a Collection B is rarely straightforward, and it’s develop into exceptionally tough within the final yr because the enterprise spigot slowed to a trickle. But it surely’s a unique story in case you’re an AI startup, proper? In spite of everything, VCs are throwing cash on the AI house.
Not so quick.
Already, the headline-grabbing funding rounds for generative AI firms are starting to gradual, and with virtually each startup calling itself an “AI firm,” it’s going to develop into harder for true AI startups to face out.
For founders attempting to lift a Collection B for his or her AI startups within the subsequent six to 12 months, a more difficult fundraising surroundings possible awaits.
So what can AI founders do to lift a Collection B when AI is in every single place? As a founder who raised a $40 million Collection B from high buyers in August final yr, I can share a number of methods that labored for us.
Convey the “why” behind AI
You might really feel like your startup is all about AI, however is it actually? Numerous startups are on the lookout for methods to include AI into their merchandise. There’s nothing flawed with including AI options, but when that’s all you’re doing, then claiming to be an AI startup only for the sake of it’s going to diminish your credibility.
For founders attempting to lift a Collection B for his or her AI startups within the subsequent six to 12 months, a more difficult fundraising surroundings possible awaits.
If AI is important to your answer, try to be ready to clarify the measurable influence it has in your product providing. Do your fashions generate a number of factors of enchancment over one of the best obtainable baseline, or does it signify a big step-function leap from the established order?
You may convey AI’s influence in your startup in a number of methods, together with quantitative metrics like mannequin efficiency, enterprise worth measures like return on funding (ROI) and whole price of possession (TCO), and qualitative proof factors like case research and success tales.
However influence alone just isn’t sufficient. OpenAI’s domination of the AI house poses a risk to numerous startups, significantly those who act as wrappers to public fashions like GPT-4. In right this moment’s hyper-competitive panorama, it’s essential to articulate how your startup stands aside from main gamers.
As an illustration, what moats does your enterprise have? Do you might have a precious, proprietary dataset? A singular enterprise workflow? Area experience? These are all essential methods to speak your startup’s aggressive edge.
Set up ironclad credibility with buyers
After being inundated with AI startups, buyers have develop into savvier about figuring out what’s and what isn’t AI. With the accessibility of huge language fashions (LLMs), constructing an “AI startup” has develop into a lot simpler and cheaper.