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Even as AI startups fall by 69%, 750K people are bootstrapping AI products, finds study

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Are you ready for the next wave of AI (artificial intelligence) startups? According to a recent study by Sortlist, the funding of AI companies has experienced a significant dip, with even multibillion-dollar tech giants seeing their AI investments stagnate. The democratization of AI has paved the way for single developers and small entities to capitalize on the hype surrounding AI and innovate on a smaller scale.

As a result, the next era of AI innovation promises to be more accessible to businesses of all sizes. So, buckle up and get ready to witness the rise of smaller companies and individuals taking center stage in the AI revolution!

750,000 people are looking to bootstrap AI products

As per the study, three-quarters of a million people are eager to bootstrap an AI product this year, as the focus shifts from big companies to smaller AI startups looking to use AI creatively.

In Q1 of 2023, there was a record-breaking 300% increase in the number of new AI products introduced on Product Hunt compared to the previous quarter. More than ever before, entrepreneurs and developers are launching innovative AI products that are gaining widespread popularity among users.

Despite the proliferation of a few prominent AI companies, the landscape is teeming with a multitude of AI startups that have surfaced in recent years. However, the momentum of this trend has hit a snag.

The number of new AI startups established globally took a sharp nosedive in Q1 of 2023. Compared to the same period in 2022, there was a staggering 69% decrease, with only 269 new AI startups founded.

Interestingly, certain regions of the world, such as Europe and Asia, experienced a more pronounced decrease, with a decline of 77% in the number of new AI startups created in 2023.

Nevertheless, the trend towards smaller AI companies and creative applications is expected to continue, offering a new wave of innovation in the AI sector.

83% of AI startups in 2023 have less than 10 employees

A whopping 83% of newly established AI companies in 2023 have fewer than 10 employees, indicating a growing trend towards smaller, more agile teams embracing the AI revolution. With AI becoming more accessible, people are starting their own businesses, whether it’s a solo venture or a small team collaboration. These new startups are often run from basements or side jobs, with the potential to create infinite AI programs.

AI funding is expected to go down by 38% in 2023

Investor interest in small AI startups seems to be waning, as Q1 of 2023 saw a 49% decrease in funding for AI companies compared to the same period in 2022. Adding to this, a recent analysis of investment trends from 2015 to the present suggests that overall investment in AI companies is expected to plummet by as much as 38% by the end of 2023.

While this may seem like a setback for the AI industry, it’s worth noting that the total Q1 investment for 2023 exceeded that of the previous year, with investors putting $15,376,852,251 into 540 AI companies – a 10% increase from the same period in 2022.

AI integration boosts tech giants’ performance by 3.5%

The AI revolution is in full swing, with companies across the board incorporating cutting-edge technology into their operations. Since the launch of ChatGPT in November 2022, the trend has only accelerated. Businesses are scrambling to integrate AI into their existing products or develop entirely new systems from scratch.

However, an analysis of the top 30 components of the ‘NASDAQ 100 Technology Sector’ in April 2023 reveals that the companies that announced new AI integrations in Q1 of 2023 did not see a significant surge in their stock prices in the month following the announcement. Interestingly, tech giants that have already incorporated AI into their operations have reportedly outperformed their peers by a whopping 3.5%. As companies continue to invest in AI, it remains to be seen who will come out on top in the race to innovate.

While larger tech companies are investing heavily in AI, the emergence of basement startups and solo developers is a clear indication of the democratization of AI, enabling smaller entities to capitalize on the trend and create innovative applications and product-market fit. This paradigm shift is shaping the next wave of AI startups, and the future of AI looks brighter than ever.

Source: Sortlist

Read next: AI in business – how to use artificial intelligence to improve businesses

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