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🤑 How AI Startups Make (or Lose) Money

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2023 has been a crazy year! Like 2022, 2021, 2020…you know what I mean.

Every year, there is some technology boom or total downfall (like crypto last year).

That is why we will take a look at how AI startups actually make (or lose) money. You may learn something new today. But first, check out how you can build a chatbot for free👇️ 

Instagram post by @aitrendz_xyz

Today, we’ll look at:

  • 🤑 How AI Startups Make (or Lose) Money

  • 🤩 3 FREE AI Tools For 2024

  • 📰 BIG AI News

  • 🗞️ Other AI News

🤑 How AI Startups Make (or Lose) Money

If you know how this works, you can skip this chapter👇️ 

In 2023, we mainly saw a rise of AI tools that are basically SaaS (software as a service). Startups make money with AIaas (AI as a service). You probably already know this. Every company profits from selling a monthly subscription to as many people as possbile for $15 or $25 (or more).

What’s interesting is the fact that most companies don’t even need to spend months or years building their AI tool. Neither they have to spend millions on development. They simply use API (Application Programming Interface), mainly from OpenAI, or other AI companies. Then they fine-tune the data to their needs.

In 2024, we will probably see the rise of AI products like the Humane AI Pin, Meta Smart Glasses, etc.. AI in devices will be more usual than ever, so it won’t be just your AI-powered Siri or Alexa.

But let’s go back to how SaaS startups make money…

  1. So they basically use tokens/data from OpenAI, pay for it, and sell the service in their fine-tuned way much more expensive. Thanks to the high demand, hundreds of startups have cashflow and will survive.

However, there are still thousands of more AI startups that will simply fail because they aren’t making enough money to cover all the costs (or don’t even have investors to back them up).

  1. Some startups are lucky, and get acquired for 6 or 7 figures. Here’s a simple math. If your startup generates $20,000 per month in revenue, that’s $240,000 per year. This is $1,200,000 in 5 years, and that is the approximate value of the AI startup.

Startups reportedly sell for around 5x annual recurring revenue (ARR).

So startups either generate big cashflows and thrive in the long run, or simply get acquired for a nice amount of money. I will personally be exploring this area much more in 2024.

🤩 3 FREE AI Tools For 2024

Maybe you know these tools, but they are FREE! Let’s explore.

1. Leonardo.ai: You probably know this AI tool, but it’s important to remember you can generate up to 150 images per day with Leonardo, which is pretty enough to get around if you’re not a digital artist.

2. Leiapix.com: Bring your images to life with AI in seconds. Leiapix helps you animate your images, making it look like they move. Of course, free of cost.

3 Suno.ai – Crazy AI music tool that lets you create songs in Discord. You just insert a music style, prompt/lyrics and it will generate you a song with a voice of your choice. Pretty fun to play around!

PS: You have to join in Discord to try this.

📰 BIG AI News

1. 💕 Viral romantic AI companion app brutally roasted online: The AI chatbot Digi, marketed as a future romantic companion, has sparked controversy and criticism. Users have raised concerns about the ethical implications of targeting vulnerable individuals for profit and the absence of authentic human connection. The backlash includes skepticism about the societal impact of such technology, with comparisons to scenarios from the TV show Black Mirror. Many view the promotion of Digi as a troubling direction for society and technological development.

2. ❌ GPT-4.5 Rumors slashed: There were some serious rumors going around about possible release of GPT 4.5 soon. However, the CEO of OpenAI cleared out the air right away. Or at least for now.

3. 🤖 Tesla shows off unfinished humanoid robot prototypes: Tesla recently showcased its latest humanoid robot, Optimus Gen 2, in a demo video, marking significant improvements from last year’s prototype. The new version is lighter by 10 kg, 30% faster, and exhibits more human-like features, including improved balance with human foot geometry, tactile sensing in all fingers for delicate tasks, and enhanced motion range in the hands and neck. This advancement in AI hardware, following notable developments like Nvidia’s pen-spinning robot model, signifies a leap forward in the field, bridging the gap between hardware innovation and software capabilities.

🗞️ Other AI News

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Rene Remsik

Rene Remsik

I'm the founder of AI Trendz, with 7+ years of experience in content creation and writing. I have run a content creation & social media agency since 2023. 
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