As we bid farewell to the rollercoaster ride that was 2023 for artificial intelligence (AI) startups, it’s natural to wonder what the future holds. With so much hype surrounding AI in recent years, it’s becoming increasingly difficult to predict exactly what will happen next. However, some experts are already weighing in on their thoughts and predictions for the industry in 2024.
Continued Funding but a Shift towards Durable Businesses
One thing is certain: 2023 was an exciting year for AI startups, with many companies raising funding at high valuations. But as we move into 2024, some experts predict that the market will shift towards more durable businesses, rather than just hype-driven ventures.
According to Kevin Lalande, managing director at SantĂŠ, "While there has been a bubble building in this space, 2024 and 2025 will be when some of the most interesting companies of the next generation will be started." Lalande believes that we’ve yet to see the best of AI, and that the market is ripe for innovation.
The Divide between Strong Startups and Hype-Driven Ventures
However, not everyone is as optimistic. Pradeep Tagare, head of investments at National Grid Partners, expects the divide between strong startups and those that raised money simply on hype to become more obvious this year. "Many companies will probably fail, including those who raised a round in 2023," he warns.
What Kind of Startups Will Thrive?
So, what kind of startups are likely to thrive in 2024? According to experts, the ones that focus on creating real products and solutions will be more likely to succeed. "Startups building ‘wrappers’ for big players’ algorithms, and companies that use AI to create a feature â not a product they can use every day" will struggle, warns Elena Mazhuha, an investment director at Flyer One Ventures.
The Importance of Focus on Real Products and Solutions
In contrast, startups that focus on creating real products and solutions are more likely to succeed. This means building something that people actually need, rather than just trying to ride the AI hype wave. Don Butler, managing director at Thomvest Ventures, agrees: "While there has been a bubble building in this space, 2024 and 2025 will be when some of the most interesting companies of the next generation will be started."
Conclusion
As we look towards 2024, it’s clear that AI startups will continue to face challenges and opportunities. By focusing on creating real products and solutions, startups can differentiate themselves from the hype-driven ventures that may struggle in the coming year.
Key Takeaways
- The market for AI startups is shifting towards more durable businesses.
- The divide between strong startups and those that raised money simply on hype will become more obvious this year.
- Startups building real products and solutions are more likely to succeed.
- 2024 and 2025 will be the years when some of the most interesting companies of the next generation will be started.
Sources
- Kevin Lalande, managing director at SantĂŠ
- Pradeep Tagare, head of investments at National Grid Partners
- Elena Mazhuha, an investment director at Flyer One Ventures
- Don Butler, managing director at Thomvest Ventures
