How to create a successful artificial intelligence startup How to create a successful artificial intelligence startup

How to start working on your own artificial intelligence project and how to draw the interest of investors? Let’s define where to start and how to attract attention to your startup.

How to build an artificial intelligence startup

The analysis conducted by Tractica shows that commercial projects in the field of artificial intelligence are used in 27 different areas (finances, healthcare, manufacturing are the main of them). New projects appear every week. For instance, Tetra recognizes voice and creates records in your phone, and Hyper Science analyzes forms using optical character recognition.

Computer processing capacity is rapidly growing, meaning that the prospects of AI startups are improving as well. So where to start in order to develop and successfully present your idea to investors?

► Learn the theory

It is hardly possible to build an attractive product or solution that will enjoy high demand without understanding AI concepts. For a start, you should learn the basic deep learning method beginning with the introductory course, free playlists, and course. You should also learn other machine learning techniques to choose the best option for the realization of a specific idea.

► Define the task

The solution should primarily interest its authors. Of course, the prerequisite for a truly successful startup is the relevance of the task for consumers. Take a challenge that you or your close people face. Another option is to study forums and themed blogs to understand which solutions other people lack.

► Analyze the market and collect data

Further, you need to define the target audience, pricing policy, and learn everything about competitors in the chosen niche. At this stage, you can set up a blog and attract attention to your AI-based tool.

Data collection is one of the most important stages as data is vital for machine learning. You can use public data sets or such services as Amazon Mechanical Turk for this purpose. The more information you get the smarter algorithms you can build.

For adequate work on the AI startup, you will need a reliable and responsible team. Only after you have gathered the team, you can start to look for investors. Artificial intelligence startup can raise funds using ICO, crowdfunding, and venture funds.

Which startups interest investors?

Investors assess the sustainability of projects by several characteristics. One of them is the industry in which the startup specializes. Artificial intelligence is a very attractive field from this perspective. According to forecasts of Markets and Markets, the global AI market will reach $5 billion by 2020.

However, it is not enough just to jump on the bandwagon. To gain trust of investors, you have to show the opportunities and potential benefits of the solution.

The team roster working on the project is also very important. If it involves specialists with vast experience and individuals authoritative in a specific field, it will build trust of investors.

Of course, special attention is paid to the AI-based solution offered by the startup. The product should be functional, solve a concrete problem of concrete target audience, and show high competitive edge. The startup’s exclusive access to a specific valuable technology or customer base will be a huge advantage.

How to create a successful artificial intelligence startup

The company’s success mainly depends on the accuracy and correctness of the assessment of key performance indicators. Sheer analytics provides investors and the management team with the real picture of the project’s prospects:

  • Customer acquisition cost (САС). The average amount that the project will spend on marketing and acquisition of one customer;
  • Customer retention rate. The percentage of users that keep buying products within a specific timeframe;
  • Lifetime value (LTV). Total profit obtained from one customer;
  • Ratio of CAC and LTV. The main parameter of business stability.

Besides, you need to take into account monthly expenditures, margin, conversion rates, sales volume, and overhead expenses.

Mistakes you should avoid

Why investors finance some projects but completely ignore others? Let’s review several common mistakes that push off potential investors at early stages.

  • An extremely narrow focus. Products should meet the requirements of specific customers, but if the target audience is too small, the project will not bring the expected revenue;
  • Non-unique offering. It does not make sense for investors to finance non-unique products, especially if the startup management team artificially exaggerates their uniqueness (while the project has many competitors with similar solutions);
  • Incomplete team. The promise to set up the team after the project receives financing carries little credibility;
  • Non-scalable business model. A startup always equals to scalability and growth. If authors fail to show this, the investor will not get interested in the project.


These recommendations will be of great assistance at early stages when you need to plan and start building your startup, but none of them provides a 100% guarantee of success. A startuper should primarily learn to analyze information independently and accurately evaluate the project’s prospects (for the startup and potential investor). Taking all of it into account, you need to build your own business strategy and plan how to attract investments.

Related news