{"id":609412,"date":"2024-02-20T11:30:20","date_gmt":"2024-02-20T08:30:20","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/how-startups-can-win-the-2024-investment-race\/"},"modified":"2024-02-20T11:30:20","modified_gmt":"2024-02-20T08:30:20","slug":"how-startups-can-win-the-2024-investment-race","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/how-startups-can-win-the-2024-investment-race\/","title":{"rendered":"#How startups can win the 2024 investment race"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3879bb55954\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3879bb55954\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/how-startups-can-win-the-2024-investment-race\/#The_differentiation_and_competitive_moat_key_to_AI_funding_success\" >The differentiation and competitive moat key to AI funding success<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/how-startups-can-win-the-2024-investment-race\/#Companies_with_vertical_data_moats_will_lead_the_next_wave_of_funding\" >Companies with vertical data moats will lead the next wave of funding<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/how-startups-can-win-the-2024-investment-race\/#The_core_mistakes_of_pitching_AI_%E2%80%94_and_how_to_avoid_them\" >The core mistakes of pitching AI \u2014 and how to avoid them\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/how-startups-can-win-the-2024-investment-race\/#So%E2%80%A6_whats_next\" >So\u2026 what\u2019s next?<\/a><\/li><\/ul><\/nav><\/div>\n<p><img decoding=\"async\" src=\"https:\/\/img-cdn.tnwcdn.com\/image?fit=796%2C417&amp;url=https%3A%2F%2Fcdn0.tnwcdn.com%2Fwp-content%2Fblogs.dir%2F1%2Ffiles%2F2024%2F02%2FAI-startups-fundraising.jpeg&amp;signature=fee338f2308fb4e051b6fc1d79ad6650\" \/><\/p>\n<div id=\"article-main-content\">\n                            <span style=\"font-weight: 400;\">Until now, generative AI has been akin to fairy dust \u2014 just sprinkle it in your pitch, and investors are all too ready to open their wallets wide.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is changing.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Q4 of 2023 saw a 55.3% decline in AI funding compared to Q1, mirrored by fewer deals. Experts like Matthew Marwick from the Intelligence Unit at CB Insights warn<\/span><span style=\"font-weight: 400;\"> that<\/span><span style=\"font-weight: 400;\"> while the AI funding will likely pick up steam again in the following quarters, the bloated investment rounds typical for 2021 and 2022 are now off the table.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The dust after the initial AI boom has somewhat settled, exposing the first challenges. Many AI companies that raised easy rounds during the funding boom didn\u2019t achieve the commercial success investors expected.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A mere mention of generative AI is no longer enough to raise massive rounds. Investors now seek strategic defensibility and differentiation in your stack against incumbents and new entrants flooding the market. They want long-term<\/span><i><span style=\"font-weight: 400;\"> market value<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p>The question is, in a world where everyone pitches AI, how do you cut through the crowd and attract investment?<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_differentiation_and_competitive_moat_key_to_AI_funding_success\"><\/span><strong>The differentiation and competitive moat key to AI funding success<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Foundational models have been instrumental to the progress of the space. The problem arises when startups begin to pitch the same generic underlying models as their core value and competitive moat.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>roach is deeply flawed. The investor view is that AI and LLMs possess no inherent moat or competitive advantage \u2014 just like anything that is available to essentially everyone. If your company isn\u2019t explicitly centred on researching, developing, and distributing foundational models, your moat and product differentiation must lie elsewhere.<\/span><\/p>\n<p><em>AI should act as an amplifier of a pre-existing product or strategy differentiator.<\/em> <span style=\"font-weight: 400;\">It is a supporting infrastructure for AI-first and AI-enabled startups that magnifies the initial value you deliver to the user \u2014 making the process cheaper, faster, more precise, and enhancing quality. But it doesn\u2019t <\/span><i><span style=\"font-weight: 400;\">create<\/span><\/i><span style=\"font-weight: 400;\"> value out of thin air.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Cool AI features mean nothing if they don\u2019t help to meet the needs of a specific persona, elevate user experience, or address specific use cases. This \u201cAI for the sake of AI\u2019s\u201d approach most companies have mistakenly adopted has spawned a phenomenon termed \u201cAI tourism,\u201d where users, not witnessing substantial value addition to their lives or workflows, don\u2019t stick with the product.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Lesson learned: presenting an interesting case for investors will mean diving deep into the tangible use cases and value your AI <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> will create.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Companies_with_vertical_data_moats_will_lead_the_next_wave_of_funding\"><\/span><strong>Companies with vertical data moats will lead the next wave of funding<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Vertical AI \u2014 software customised for a specific industry and its problems \u2014 is gaining momentum among investors and end-users. Index <span style=\"font-weight: 400;\">Ventures<\/span> partner Paris Heymann called vertical AI \u201cthe next logical iteration of vertical SaaS\u201d that might act as an industry\u2019s <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/game\/\" data-internallinksmanager029f6b8e52c=\"7\" title=\"Game\" target=\"_blank\" rel=\"noopener\">game<\/a>-changer.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">By delivering high-quality results on specific use cases without generating irrelevant BS, such tailored models increase time-to-value and user retention. This ability will make vertically integrated apps key in driving differentiation.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Unique data sets<\/span><\/i><span style=\"font-weight: 400;\">, <\/span><i><span style=\"font-weight: 400;\">customised go-to-market plans<\/span><\/i><span style=\"font-weight: 400;\">, and the <\/span><i><span style=\"font-weight: 400;\">capacity to deeply integrate into user day-to-day processes<\/span><\/i><span style=\"font-weight: 400;\"> make them hard to replicate and promise immense potential.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Looking at the investment landscape, we already see this trend playing out massively in data-heavy industries like legal and healthcare \u2014 but it will surely play out in other sectors as well.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_core_mistakes_of_pitching_AI_%E2%80%94_and_how_to_avoid_them\"><\/span><span style=\"font-weight: 400;\"><strong>The core mistakes of pitching AI \u2014 and how to avoid them<\/strong>\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">So, what does it mean for founders looking to raise money for AI solutions today? And how do you make sure your pitch lands in just the right spot? In 2023, we at <\/span><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/waveup.com\/\"><span style=\"font-weight: 400;\">Waveup<\/span><\/a><span style=\"font-weight: 400;\"> worked on over 20 successful (and not so much) AI fundraisers, witnessing firsthand the difference between AI winners and losers.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here are the mistakes we see companies make when pitching AI and how to fix them:<\/span><\/p>\n<ul>\n<li><b>Not representing your team\u2019s skill set correctly.<\/b><span style=\"font-weight: 400;\"> Your team\u2019s structure must reflect the AI-first nature of your company and have deeply skilled AI scientists or people with prior experience in building AI applications.\u00a0<\/span><\/li>\n<li><b>Not demonstrating vertical-specific GTM models using AI.<\/b><span style=\"font-weight: 400;\"> Commercialisation is a big factor now in AI, so investors want to see a clear GTM motion with a pronounced distribution moat.\u00a0<\/span><\/li>\n<li><b>Not knowing the cost. <\/b><span style=\"font-weight: 400;\">Too many companies have no clue about the inner workings of their economics, but this cluelessness isn\u2019t sustainable in the AI space, where building, training, and deploying AI models can cost an arm and a leg. At a time when VCs put capital efficiency on a pedestal, you\u2019re expected to understand your cost structure, needed resources, and gross margins in and out.\u00a0<\/span><\/li>\n<li><b>Not knowing what you are building. <\/b><span style=\"font-weight: 400;\">\u00a0Be ready to walk the talk and prove you know the underlying tech. Here are some things you will need to explain to investors:<\/span><\/li>\n<\/ul>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Your model architecture and the techniques you use to improve it<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The process of collecting and growing your datasets<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The ways you measure your models\u2019 accuracy and performance (benchmarks, performance baseline)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Accuracy requirements for your model to be valuable for the user<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The strengths and limitations of your model<\/span><\/li>\n<\/ol>\n<h2><span class=\"ez-toc-section\" id=\"So%E2%80%A6_whats_next\"><\/span><strong>So\u2026 what\u2019s next?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The AI race is underway, and we are all part of it. A prevailing ambiguity surrounds the AI application market, and while investors don\u2019t place their bets just yet, they do, however, eye every AI opportunity that comes their way more thoroughly than ever before.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For early AI companies, defensibility and durability become the order of the day to attract funding. The casual mention of AI in your pitch deck no longer suffices to instigate serious investor engagement \u2014 you must know your technology in and out, understand its value for the end customer, have a preexisting moat, and show proof that you can execute on the highest level. Do this, and every VC door will open for you.<\/span>\n                        <\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMN63nwsw68G3Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more like this article, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/technology\/\" target=\"_blank\" rel=\"noopener\">Technology category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/thenextweb.com\/news\/ai-fundraising-strategy-startups-win-2024-investment\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Until now, generative AI has been akin to fairy dust \u2014 just sprinkle it in your pitch, and investors are all too ready to open their wallets wide. This is changing.\u00a0 Q4 of 2023 saw a 55.3% decline in AI funding compared to Q1, mirrored by fewer deals. Experts like Matthew Marwick from the Intelligence&#8230;<\/p>\n","protected":false},"author":1,"featured_media":609413,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/img-cdn.tnwcdn.com\/image\/tnw-blurple?filter_last=1&fit=1280,640&url=https:\/\/cdn0.tnwcdn.com\/wp-content\/blogs.dir\/1\/files\/2024\/02\/AI-startups-fundraising.jpeg&signature=c7cb6f5b6cf445be68467b8966ab639f","fifu_image_alt":"","footnotes":""},"categories":[18],"tags":[],"class_list":["post-609412","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/609412","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=609412"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/609412\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/609413"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=609412"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=609412"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=609412"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}