AI startups are shattering the unicorn valuation ceiling of $1 billion in
record time according to data from CBinsights. On average, it is taking them 3.5 years to achieve this feat in comparison to US startups that do so in an estimated 7 years according to research from ZenBusiness.
OpenAI, creators of the world famous ChatGPT is currently valued at $29 billion and was able to achieve unicorn status in just 4 years.While Inflection, cofounded by Reid Hoffman of Linkedin fame raised $225 million in equity to leverage large language models to help humans talk to computers achieved $1.2 billion valuation in almost zero year.
Let us dive into these scatterplots I created on Tableau to really drive home the point of the phenomenal rise of AI startups.
Looking at this chart, you’ll notice a sharp downward trend, which reveals that the earlier the year of founding, the farther it took generative AI startups to achieve unicorn valuation. In essence, it will take these startups lesser time overall to become valued at over $1 billion.
- It took Photo editing apps maker, Lightricks 6 years to become a unicorn
- 4 years was what it took OpenAI to crush the $1 billion mark
- Hugging Face, the machine learning model for enterprise took 6 years to achieve the feat
- Cloud development platform and github copilot, Replit also took 6 years
- Adept which trains machine learning models to do tasks for us got valued at $1 billion in 5 years
- Large language learning model builders, Cohere took 4 years
- Enterprise AI search and knowledge discovery platform, Glean
- AI content writing platform, Jasper did this in 3 years
- Digital images AI tooling company, StabilityAI in 2 years
- 2021 was all the rave for AI startups as
- Large language learning model developers, Anthropic, conversational chatbot CharacterAI and animated AI images startup, Runway all launched in 2021 to speed through this barrier in just 2 years
- Inflection, leveraging AI to help humans talk to computers founded in 2022 emerged as a unicorn after its giant raise.
The fascinating bit of this insight is that they are doing this without having the requisite revenue to match these valuations.
If you look at this AI startup revenue scatterplots I created, openai valued at $29 billion generated just $30 million in 2022 while Jasper generated $45 million in the same period.
Glean AI has a $2.7 million revenue with a $1 billion valuation while Runway is averaging $1 million revenue at $1.5 billion valuation.
Comparing OpenAI and Youtube’s Valuations and Revenues
Let’s do a comparative analysis of OpenAI and Youtube as a brand:
Youtube generated $28.8 billion revenue in 2021, a 46% year over year increase with 2,5 billion unique visitors accessing the platform monthly according to Business of Apps. It currently has a brand value of $23.9 billion according to Statista.
While OpenAI’s ChatGPT is the fastest growing consumer technology product, gaining 100 million subscribers in the first two months of launch, it is valued at $29 billion with a $30 million revenue – talk about the huge disparity.
Comparing their valuations with their activities, you may be thinking, “will AI be the future of the world?” Probably, you’re not wrong.
Of course, we all know that the growth of generative AI platforms is as a result of the prospect of artificial intelligence changing the world as we know it and of course this has created an investor frenzy.
So as a startup founder, it is probable that Venture Capitalists will give you the “what is your AI strategy wink” while you’re trying to pitch them. So, get ready.
With the bullishness with anything artificial intelligence as investors move towards the light of what the future can be. So as a startup founder your first expectation should be knowing that VCs will likely wink at you to find out what is your AI strategy and you’ve got to be ready to deliver on that question.
Charting tool: Tableau
Link to interactive chart: The AI Unicorn Phenomenon | Tableau Public
Data Source: CBInsights, TechCrunch
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