Generative AI will create a new wave of successful businesses

The most optimistic outlook that people are hoping for in the new era of artificial intelligence (AI) is that there will be many unicorns (startups valued at over 1 billion USD) and decacorns (new businesses valued at over 1 billion USD). at least 10 billion USD) will be built
Every 14 years there is a technological revolution, for example: Internet browsers were born in 1994, smartphones were born in 2007-2008. Then, towards the end of 2022, we enter the innovative technology revolution of AI.

General AI, also known as Generative AI (Gen AI), is a popular keyword this year. This technology is "taking over" the entire global technology ecosystem. The global AI market is currently predicted to be worth $136.6 billion, with some estimating this value will increase by 40% in the next eight years.

The most optimistic outlook for the new AI era is that there will be many unicorns (startups valued at over $1 billion) and decacorns (new businesses valued at at least $10 billion) that will be built. While Gen AI has the potential to create billions or even trillions of dollars in economic value, there are real questions about how many of these pioneers will go on to become leaders. Big name businesses and how many people will eventually perish under the hype.

However, innovative AI tools are attracting the attention of the media, technology world and investors. While a number of pioneering companies have developed AI tools that help solve many problems for life and society, it remains to be seen how many of these startups will become sustainable, long-term businesses. long?.

According to Venturebeat, most individuals and startups that have made money through AI "became businesses by accident" and that development was not part of any long-term strategy. Therefore, the question is what will they do to expand scale and grow sustainably?.

There are many Gen AI startups still struggling to find ways to take this fascinating technology and truly turn it into a sustainable business. So, where can innovative AI startups start if they want to turn this short-term hype into long-term growth and not miss out on the huge potential market opportunity.

85% of AI startups will stop operating in the next 3 years It is no coincidence that investors and experts are concerned about the sustainable growth of AI startups. 2023 has seen the start of a race between Big Tech and startups to quickly develop AI-linked commercial applications, which advocates say will change everything.
AI is already in our daily lives in the form of Siri (Apple), Alexa (Amazon), medical devices (scanners), and cars (driver assistance systems). But the public really learned about the advancement of this technology after the launch of ChatGPT, a chatbot developed by startup OpenAI in which Microsoft has invested more than 10 billion USD.

ChatGPT made Alphabet's Google search seem outdated and heralded a new era. ChatGPT is designed to provide users with customized results for their queries and more friendly interaction with search engines.

Ken Smythe, founder and CEO of Next Round Capital Partners, a venture capital firm in New York, said that beyond this standard development of AI, this technology will transform all industries, helping they operate more efficiently while reducing costs. Next Round Capital Partners specializes in investing in technology and AI startups. The company has invested in Uniphore, a conversational AI startup that develops virtual customer service agents for call centers.

However, Smythe predicts that 85% of AI startups will stop operating in the next 3 years because they are swallowed up by large companies or simply because they run out of cash. “I would say that a lot of startups today, 85% of them, will be out of business in three years. They will run out of funding. Meanwhile, Google, Open AI/Microsoft, Facebook (META), Amazon will have hundreds of billions of dong to spend on AI development, while if they were an AI startup, they would have to spend a lot of capital. Can startups really keep up and have enough scientists and PhDs to develop innovative code that is commercially viable, or will a lot of larger companies crush them?”, Smythe said.

Many barriers stand between a Gen AI startup and a business achieving sustainable growth

First, to use a new technology and turn that technology into profit is not easy. While Gen AI technology is impressive, it's unclear how to monetize it or integrate it into a profitable business model.

To date, some of the most successful AI startups have used the technology to improve operational efficiency - like Observe.ai, which automates repetitive processes to drive revenue - or to help with processing language and content creation, like the AI ​​copywriting assistant Jasper. Who. But the emerging generation of AI startups will have to carve out their own niches if they want to succeed.

It will also be difficult for AI companies to maintain a competitive advantage. Many AI startups are struggling to differentiate themselves in an extremely crowded market, and for every entrepreneur with an innovative strategy, there are 10 others riding the wave without a destination - given a “solution” without a clear idea. In Europe alone there are 130 Gen AI startups, and the chances of all these companies achieving long-term profitability are slim.

Ultimately, AI is still a young technology with big questions about ethics, misinformation, and national security concerns that need to be answered. AI companies looking to streamline workflows will have to address concerns about third-party software accessing internal, potentially sensitive data before widespread adoption can occur. widely, while startups taking advantage of the speed and efficiency of Gen AI must put in place enough safeguards to address outdated concerns that these “machines” could replace up to a quarter of their jobs. we.

To address the barrier, serious innovative AI startups need to apply some basic principles. The AI ​​market is especially vibrant with investors pouring capital despite the "startup winter" at the present time. Still, with the recent market downturn, investors are more interested than ever in actual, rather than expected, growth and are scrutinizing whether their recipients will build Determine whether the business platform is scalable or not