AI startups reach millions in revenue much faster than other young companies

Research from Stripe, which analyzed payment flows, shows the ability of young AI companies to reach multi-million dollar revenues much faster than startups in other categories. This sometimes happens during the first year from the start of commercial activity.

Image source: OpenAI

The findings from this study are intended to address concerns among some investors about the ability of AI startups to begin generating adequate profits once they go to market. Another thing is that the required investments are often measured in billions of dollars, so there is still no need to talk about a quick return on investment in the field of artificial intelligence. Stripe found that AI startups that provide customers with access to the software they have developed for a fee are the fastest to grow revenue.

The data sample for this study included indicators of Stripe’s own payment system, serving the 100 largest AI startups by turnover as of July 31, 2024. The payment data of the 100 largest software startups as of July 2018 was selected as a basis for comparison. Examples of Stripe clients include OpenAI, Anthropic, Mistral, Github, and Midjourney.

On average, it took AI startups 11 months to reach $1 million in annual revenue from the start of business, according to Stripe. The previous generation of startups achieved the same results in an average of 15 months. Moreover, AI startups achieved annual revenues of $30 million in an average of 20 months, five times faster than the previous generation of startups. The sample included young companies that specialize in software.

AI business requires significant capital investment, but experimental products offered by startups in this field sometimes attract many customers willing to pay for them. Introduced in the fall of 2022, the ChatGPT chatbot became the application with the fastest growing audience, which reached 100 million people in just two months from the launch of the service. By some estimates, commercial customers now bring in at least $3.6 billion a year to OpenAI. On the other hand, the company’s annual expenses significantly exceed $5 billion, so at this stage of development the business continues to be unprofitable.

With costs soaring, AI startups are being forced to monetize their businesses faster, according to Stripe. Demand for the services of such companies is observed on a global scale. Up to 56% of the revenue of such startups is obtained outside the country in which they were founded, according to statistics. Users of the services of the hundred largest AI startups are even in small countries like Singapore and Ireland, where more than 3% of the population are their clients. Companies operating in this area manage to quickly offer users new functionality of their software. In this they have an advantage over the clumsy software giants. In a couple of years, they are quite capable of increasing revenue from zero to several tens of millions of US dollars.