10 Simple Things To Remember When Investing In Generative AI The disruption caused by ChatGPT has increased the appetite for investment in the space. Thus, on the eve of National Technology Day 2023, we bring you some guidelines on investing in the sector from experts who are closely watching the space

By S Shanthi

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With ChatGPT becoming a household name, the Generative AI space is expected to see huge growth in the coming years across the globe. The global market for generative AI is anticipated to increase from $11.3 billion in 2023 to $51.8 billion in 2028 at a CAGR of 35.6% over the course of time, says a recent report.

Prominent global startups in the space such as Jasper, Runway, Lightricks, and Stability AI have so far collectively raised over $500 million in funding showcasing the potential. In India too, we are witnessing a proliferation of new startups working on innovative solutions using Generative AI. Experts expect to see its wider adoption across industries, including content, retail, healthcare and finance. Thus, the segment is being closely watched by investors and is expected to see a huge inflow of capital in the coming years.

Investments in the AI space have been on the rise for a long time. According to Stanford University's annual AI Index report, India ranked fifth in terms of investments received by startups offering AI-based products and services last year. With the ChatGPT revolution, Generative AI startups, particularly, may see more capital inflow soon.

Thus, on National Technology Day 2023, we bring you below 10 key things to remember when investing in the sector.

These inputs have been shared by Raj Neervannan, co-founder and CTO, Alphasense, Kavit Sutariya, general partner, CapFort Ventures, Sunil Shekhawat, CEO, Sanchiconnect and Bhargavi V, partner, Java Capital.

  1. Look for clear use cases where the technology by the startup can make an impact. Startups should have a clear understanding of the specific problems they want to solve.
  2. Check if the startup has the technical expertise to develop and implement generative AI solutions. This is a rapidly evolving field that requires specialized skills, so they should be hiring the right talent and partners.
  3. Consider the legal and ethical implications of the startup's generative artificial intelligence technology and how it may be regulated in the future.
  4. Analyze the competitive landscape of the generative AI space and how the startup's technology compares to that of other market participants. Who are its competitors? What are their strengths and weaknesses? How does the company differentiate itself from its competitors?
  5. Check if the firm emphasizes strongly on innovation and R&D and are developing novel approaches to generative AI.
  6. Focus on the fundamental technology and its application in a startup's solution.
  7. Consider the potential risk of technology obsolescence and commoditization, as many firms are making their tech open source.
  8. Evaluate the market size for the company's product or service. Is there a significant demand for generative AI in the target market? What is the potential for growth in the future?
  9. Look at the company's business model and revenue streams. Is the company generating revenue from its product or service? Is the revenue model sustainable in the long term?
  10. Apart from the above, the funding and regulatory environment should also be considered while investing in companies working with generative AI.
S Shanthi

Senior Assistant Editor

Shanthi specializes in writing sector-specific trends, interviews and startup profiles. She has worked as a feature writer for over a decade in several print and digital media companies. 

 

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