VC/Founder Tomasz Tunguz shared how AI startups can unlock VC funding at the #DataCloudSummit24.
Here are 5 things he looks for to determine technical advantages with GenAI startups:
🚀 Speed
“Speed is really important — 5% of additional market share probably translates into significant enterprise value creation 5 to 10 years from now with the benefits of compounding.”]
🔒 Own the data
- Create workflows that Generate Proprietary Data:
- Access to proprietary data provides core moats.
- In the long term, usage and distribution are likely the most sustainable and repeatable.
- Creating a flywheel — More queries -> more diagnostic data to improve the model -> a better product with more users.
🔧 Efficiency
“Efficiency has become a critical part of evaluating investment.” A few years ago, it was growth-at-all-costs. Today, you really want a burn multiple of 1.5 to 2x, except in AI where it’s significantly less.
💰 Quality of Revenue
- Multi-year contracts are good indicators but difficult to close multi-year TCV deals for early-stage AI companies.
- NDR is another key metric; however, it’s still unclear if customers will stay on, particularly for single-use case AI products (e.g., security, marketing).
📈 Raise BIG rounds
“Raise as much as you possibly can to capture as much market share as possible.” Capital intensity is huge because of GPU demands.