How artificial intelligence is impacting the startup world

Artificial intelligence as a lever for innovation in startups: success stories

According to Bloomberg , AI, if in 2022 it had generated a market of 40 billion dollars, by 2032 it will give life to a business of 1,300 billion. On the other hand,
a recent study by McKinsey
estimates that GenAI will have a significant economic impact, with valuations between $2.6 trillion and $4.4 trillion. The fields of application of AI in startups are so vast that it is almost impossible to deal with them all at once. For this reason, below are listed some very approximate success stories, which provide a rather comprehensive picture of the direction of AI.

Lyra, Google and Youtube

In just 20 years, the music industry has seen the advent of MP3, streaming and user generated contant (UGC). Today, after the probable hype of blockchain, NFTs and the metaverse, generative artificial intelligence has also taken over in the music sector. Machine learning is the central ingredient: an example is Lyra, the AI music tool just launched by Google DeepMind and Youtube. It is worth mentioning that Youtube between 2021-2022 generated over $6 billion in revenues, and still has more than 80 million subscribers. Google has also just launched the update of Aloud, the dubbing feature that allows creators to translate videos into other languages. And today, Google is globally considered one of the 18 most trusted AI research centers.

ChatGpt (Open AI)

Open AI with ChatGPT, one year after its launch, has given birth to the most funded startup in the world: about 11.3 billion received (at least 10 from Microsoft). Lately it has been on the main stream scene for the exit and then the new entry of its CEO Sam Altman: three CEOs took turns in just over a weekend (Mira Murati, Emmett Shear, Sam Altman).

Anthropic

Anthropic is a startup that develops general artificial intelligence systems and large language models. It is the second most funded startup in the world, founded by Italian-American siblings Dario and Daniela Amodei, former members of OpenAI, and, like ChatGPT, is based in San Francisco.

Mistral AI

French AI startup plans to launch a European version of ChatGPT. So far, Mistral has raised €100 million in its first month of life and is valued at around €300 million. It plans to launch the first generative AI models in 2024.

Automating and optimizing business processes with AI

The advent of AI has made it increasingly clear how managing and monitoring a range of activities within an organization without human intervention is the future of businesses. Processes that start from the management and production of document flows (acceleration of processing times and reduction of errors) to the management of human resources (with the simplification of onboarding), up to accounting (error reduction and data analysis and reporting) and customer service (through chatbots and automatic response systems). One of the many benefits, in addition to reducing costs, is the saving of time and resources, allowing employees to focus on more important and strategic initiatives (OECD Employment Outlook 2023). This had already been analyzed by Startupbusiness in the nocode movement and its implementation with AI. In fact, Artificial Intelligence can also be used in the production of code, to allow developers to get rid of the “obstacles” related to overly operational and initial phases of work.

The role of artificial intelligence in the development of innovative products and services

In digital transformation, AI helps to recognize, detect important information related to product performance, workflow optimization and predictive results. This facilitates the development of innovative products and services in various sectors, from finance to fashion and design. According to the study entitled The economic potential of generative AI, a collaboration between the McKinsey Global Institute and QuantumBlack, generative AI could bring “potential productivity benefits in R&D activities” for “between 10 and 15% of the total costs of the function”. This production implementation contributes to the creation of different facets: such as the acceleration of the creative process with faster prototyping or as large-scale customization.

Personalizing and improving the user experience with AI

Today, AI is also proving to be highly innovative in marketing . In fact, marketers by adopting AI in content marketing strategies, targeted in personalizing content based on individual or group preferences, behaviors and demographics: here AI, being able to process large amounts of user data to identify patterns and preferences in their behavior, can modify content dynamically and in real time, For example, by processing website content, e-mails or product recommendations. But this is already the case in publishing and journalism : artificial intelligence is mainly used to speed up newsroom flows by automating operations such as transcriptions and translations, to create data-driven content without abandoning journalists in the paperwork, and above all to personalize the user experience and lead them to subscribe through the analysis of online behavior. Well-known newspapers such as the Times analyze user behavior to the millimeter to create totally data-driven content strategies.

Artificial Intelligence and Data Analytics: The Value of Information for Startups

Today, data is increasingly becoming the raw material of all companies. The most relevant phenomenon is represented by the birth or development and increase in demand for figures that are increasingly sought after by companies, such as the evolution of the data analyst into data scientists, able to combine the ability to analyze data with skills related to machine learning techniques, and also the ability to handle big data. In fact, companies now base their strategies on the data acquired from users. Startups have been pioneers in this and today they are repeating it with AI: artificial intelligence is in fact an excellent catalyst for the enormous amount of data circulating with its ability to process and decipher huge volumes of data. Advanced algorithms can look at consumer behaviors, product reviews, and market trends to suggest innovative product or service ideas. ISO/IEC 27001 saw its third edition in 2022. The standard ensures the management of security in information technology. Microsoft got certified in 2013,
Google
in 2016, Amazon in 2010.

Machine learning and predictive analytics: how artificial intelligence is changing decision-making

In the search advertising sector (both SEA and SEO), the training of artificial intelligence has made it possible to clearly improve the performance of marketing campaigns. AI is able to intervene on three major fronts: keyword understanding (not only syntactic but semantic), bid strategy optimization, and conversion optimization. The need to predict what customers’ interests will be in the near future and in the short term is now an entrepreneurial trend for any type of business strategy: in fact, the predictive algorithm makes it possible to extrapolate in the amount of data and in a given time range what can be considered real trends with a good probability of growth over time. Subsequently, the algorithm develops real predictions by comparing the extracted trends with the available historical data.

Challenges and Opportunities for Startups in Adopting AI

Starting a startup in recent years is a completely different process than it could have been 20 years ago. In the meantime, the world has transformed, from economic scenarios (especially in the last three years) to technological ones. Today, launching a startup, if at the level of literature it is more accessible and may at first glance seem within everyone’s reach, in practice, not making it fail, becomes increasingly difficult. This is where AI can come to the aid for all aspects due not only to time and costs, but also to human resources: at the genesis, startups are born with a negligible number of staff, precisely because the starting capital is little and you cannot invest too much in onboarding. Therefore, AI, not only thanks to the developments it is taking in the field of training and management and accounting processes – and therefore in the launch phase -, but also to the assessment with which it can contribute in the growth phase of a startup, is making a significant contribution: just think, for example, of co-pilot, the virtual assistant that allows users to express their requests in natural language and receive intelligent answers. Or even the integration of AI into Notion: the possibility of optimizing project management (Notion) on the one hand, and the ability to analyze and summarize the textual content of such projects on the other hand thanks to the use of artificial intelligence. Startups are the companies that are the first to experiment with technological innovations, and corporates, due to their sometimes very “armored” governance and to respond to changes in the sector, look for innovative solutions in startups.

Skills and resources needed to capitalize on AI in startups

Today, especially in Italy, startups play a decisive role in digital transformation, as a key player in transferring advanced technological skills to more structured companies. Large industrial and corporate groups are constantly announcing calls or awards, providing funding or entering the capital of the startup (corporate venture capital) to find the startup that can meet the innovative and technological needs. This way they have a long-term investment. In fact, by its nature, the startup has as its asset that of scaling, both in terms of turnover and product/service development. The corporate therefore does not buy a finished product/service, but a company that has its own productive life. For this reason, innovative startups are an essential tool for the corporate market, and currently those working with AI are the most attractive.

The market, the landscape and the context

AI is really entering geopolitical scenarios and startups, as cells of the innovative system, are well eyed. In the academic field , for example, there is the spread of
fake-papers
, fake scientific articles. The figure would be growing thanks to the use of generative AI: the sensational case was for example that of last July, when the journal Science discovered that a paper published by Nature on Alzheimer’s in 2026, and which would have influenced all subsequent scientific research, would contain false images. And it is precisely scientific knowledge that would be the object of
espionage
today: in America, some Texan universities discourage teachers’ contracts with Chinese universities that pay a lot to obtain American scientific knowledge. Then there’s the issue of data security. In fact, one of the concerns about the future of Altman’s leadership in OpenAI was due to concerns about the excessive speed of commercialization of products in the face of security. His decisions would affect his responsibilities and this would cause the board to lose the trust placed in him. Finally, there are investments and global competition: according to Visual Capitalist , 1337 AI startups were born in China between 2013-2022 and were financed with 95 billion in private investment. In the U.S., there are 4643 startups and 249 billion. Saudi Arabia recently bought about 3,000 H100 processors from Nvidia, the ones needed for AI. Europe does not seem to be united: France wants to run alone: weeks ago it launched an AI laboratory with private investments worth 300 million euros. In Italy we are very far away even if we are growing. According to the Anitec-Assinform report, the Italian AI market reached €435 million in 2022, 32% more than in 2021. For 2023, the value is expected to be around €570 million, a growth of 31% compared to 2022. So between 2020 and 2023, the AI market doubled in value, with an increase of 128%. In the coming years, the average annual growth rate could be 28.9% until 2026, reaching a volume of €1.2 billion. (image created with Dall-E)

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