How Startups are using AI

Healy Jones blends his venture capital experience with operational knowledge to support startup financial strategies. With a background in investing in over 50 startups and holding executive roles in VC-backed companies, Healy has been featured in major publications like the New York Times, Wall Street Journal, and TechCrunch. His efforts at Kruze have been crucial in helping startups collectively secure over $1 billion in VC funding, showcasing his ability to effectively navigate financial challenges and support startup growth.

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Last updated on

December 4, 2023

How Startups are using AI

In the rapidly evolving landscape of technology, startups are increasingly turning to artificial intelligence to gain a competitive edge. The adoption of the market leader, OpenAI, into the Kruze client base has been nothing short of amazing. It’s emerging as a tool used by hundreds and hundreds of our clients for a variety of purposes. From conversations with our founders, and from looking at our data, we’ve learned a lot about how startups are integrating OpenAI – and artificial intelligence in general – into their operations.

OpenAI Usage Trends Among Startups

Our data, spanning from January 2022 to December 2023, reveals significant insights into how startups are utilizing OpenAI. This data shows the percent of Kruze clients paying for OpenAI – either for API usage or for subscriptions, and has data from over 800 startups.

When OpenAI introduced its paying plans early in 2023, the growth of paid clients skyrocketed. This is one of the fastest, if not the fastest, penetration that we’ve ever seen of any tool into the client base. As of the end of October, 57% of Kruze clients were paying for the tool.

How Startups are Using AI

There are four core ways we think our clients are using OpenAI. These methods are gathered from conversations with our clients.

Subscription-Based Usage

Startups are leveraging OpenAI’s $20 per month subscription for various operational tasks. These include writing marketing copy, assisting in light coding, Excel modeling, and image generation. This versatile application signifies OpenAI’s role in offering cost-effective and efficient solutions for diverse business needs.

API for Data Processing

OpenAI’s API is being utilized by startups for converting and organizing data. This application is crucial in improving data management processes, enhancing accuracy, and enabling data-driven decision-making. These users sometimes ramp up and then drop billing, as once they get their data into shape they don’t need as much API usage. However, others use a consistent amount of data, as the data processing is core to keeping their service running.

API Integration in Products

Incorporating OpenAI’s API into products allows startups to enhance their offerings. Features such as chatbots or personalized content generation are becoming increasingly common, providing a competitive edge in the market. Others use it to power the creation of art or text. These are important use cases, as they let the startup offer a genuine AI feature or product.

Training Custom AI Models

A more advanced use of OpenAI is seen where startups use the API to train their own AI models, tailored to their specific needs. This approach indicates a shift towards customized AI solutions, demonstrating the evolving sophistication in startup tech strategies. Our assumption is that these startups will ramp down their use of OpenAI in lieu of their own once the products are created.

Why AI Matters for Startups

The rising adoption of OpenAI among startups is a clear indicator of the growing importance of AI in the business world. Startups are not just using AI for automation but are integrating it into the core of their business operations and products. As the reliance on tools like OpenAI continues to grow, it’s likely to lead to more advanced and efficient business practices in the startup ecosystem.