AI Startup Funding Fundamentals

Common AI Business Models#

1. API-First Approach

   • Charge per API call or usage
   • Scalable revenue based on adoption
   • Examples: Language models, computer vision APIs

2. Platform Model

   • Subscription-based access to AI tools
   • Enterprise licensing and custom deployments
   • Integration with existing workflows

3. Data Network Effects

   • More users generate better training data
   • Improved models attract more users
   • Self-reinforcing competitive advantage

Key Performance Indicators (KPIs)#

• Monthly Recurring Revenue (MRR)
• Customer Acquisition Cost (CAC)
• Lifetime Value (LTV)
• API Usage Growth
• Model Performance Metrics