How To Analyze AI Startups

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Artificial intelligence-based startups continue to grow and increase.

Investors funding AI companies should look for the following:

Market size.

New markets can be difficult to measure.

For brand new categories, calculate the number of users in the market and how much they will spend on an AI solution.

For existing categories, calculate the current number of users in the market and how much they will pay additionally for the AI component.

Value add.

How much value does AI add to the product?

Does it increase the revenue substantially or only marginally?

Does it give access to new users and applications or only increase functionality to existing users?

Moat.

How much of a competitive advantage does AI bring against the competition?

If it's only a small modification to an existing LLM, then it can be easily copied.

If it has been trained on a unique data set then it will have a greater advantage over competitors.

Distribution.

How well does the startup run a go-to-market strategy?

A fast penetration of the market will be a great advantage over those who take time.

Consider these factors in analyzing an AI startup.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

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