IT Operations

Want to launch an AI startup? Here’s what investors are looking for

“We’re looking for founders who are trying to solve real problems now,” Sheila Gulati, the founder and managing director of Tola Capital, a Seattle-based VC firm, told IT Brew.
article cover

Berkah/Getty Images

· 3 min read

The AI market is booming—and it’s here to stay. There are currently 23,209 AI startups in the US, according to startup tracker Tracxn, and the generative AI market is also “poised to explode,” according to a report by Bloomberg Intelligence, which indicates gen AI will become a $1.3 trillion market over the next 10 years. IT Brew caught up with investors to chat about the industry, see what they look for in an AI startup, and learn why having a background in IT is a plus for founders looking to tap in.

What do you look for in an AI startup?

“One of the things, I think, that’s really important is how much change this AI role can actually deliver in the broader world,” Sheila Gulati, the founder and managing director of venture capital (VC) firm Tola Capital, told IT Brew. “We’re looking for founders who are trying to solve real problems now, but also are looking at this arc of time [and saying], ‘Wow, the world could work really differently.’ A lot of these underlying technologies are moving so quickly—what are we going to do with that?”

How might having an IT background help an entrepreneur looking to tap into the AI space?

“I think that as people look at real problems that they’ve had in their job—so, let’s say I’ve been managing a data center or managing these things, right? What are real problems that I’ve faced? Gosh, what would I do in this AI era on that real problem? I can do 24x7 automated scaling, tuning, [and] intelligent routing, right? What would you do if you had infinite intelligence to bring to this domain or this specific area that I really care about? Most people are not asking themselves the question that way, and I think that is the core question,” Gulati said.

Top insights for IT pros

From cybersecurity and big data to cloud computing, IT Brew covers the latest trends shaping business tech in our 4x weekly newsletter, virtual events with industry experts, and digital guides.

What separates other AI companies from one another? This space seems to be growing so big.

“It’s interesting, using this term AI space—and you know what? I’m of the view that four or five years from now, we won’t even be talking about AI space,” Peter Wagner, a founding partner at Wing Venture Capital, told IT Brew.

“Because every single piece of technology will have some important aspect of it that’s AI-driven. [You have] an application that’s built on AI technology—so it’s using AI as an invisible component that is helping deliver value for a great experience, but the user isn’t being confronted with, ‘this is AI.’…[it] reminds me of, in the late ’90s, you would sometimes see people running around saying, ‘Oh, I invest in internet companies.’ And that was actually a useful distinction at the time. Now, no one would say that—an internet company? Where are the non-internet companies? So it’s on the way to being ubiquitous,” Wagner said.

What’s one big mistake AI founders looking to jump in might be making?

“I would say, don’t try to serve everyone at once,” said Tara Tan, founder and managing partner at early-stage AI-focused VC firm Strange Ventures. “I think that’s a common mistake that I see—which is [that] founders see a potential solution, and we’ll ask them…‘Who do you think the user is?’ And they’re like, ‘Everybody.’”

Top insights for IT pros

From cybersecurity and big data to cloud computing, IT Brew covers the latest trends shaping business tech in our 4x weekly newsletter, virtual events with industry experts, and digital guides.