Artificial intelligence startups had a wild ride in 2023. Everyone and their grandmother tried out some sort of AI tool, startups in the space raised rounds at 2021 valuations, there were high-profile shutdowns, and then to close out the year, we had all the drama surrounding Sam Altman and OpenAI — plus New York Times’ lawsuit against the company.
With so much in the rearview mirror, it’s hard to predict what will happen with AI startups in 2024. But some people, like investors, make their living from shrewd bets, so TechCrunch+ recently asked more than 40 investors what they think AI investing could look like in 2024.
Most investors told TechCrunch+ that they expect the current swell of funding to continue but were optimistic that the industry is moving past its initial hype cycle and toward more durable businesses. They also think that 2024 could see the beginning of a second wave of AI startups that are more verticalized, that are focused on specific sectors, and that move away from building layers on top of technologies from companies like OpenAI and Google.
Lisa Wu, a partner at Norwest Venture Partners, expects opportunities in verticalized AI to be particularly attractive this year. She thinks that there could be lower risk in investing in these startups, as they won’t be as likely — or easily — replicated by legacy companies like Microsoft and Google.
“These are AI applications with deep underlying knowledge of end-user workflows and access to industry-specific training data to make employees and teams more productive,” Wu said. “For example, law firms that effectively leverage AI will be able to offer their services at lower cost, higher efficiency and higher odds of favorable outcomes in litigation.”
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