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Adapting to Change: Strategies for AI Startups to Thrive in Dynamic Industries

Kesava Reddy

Thriving in dynamic industries requires AI startups to be agile, innovative, and strategic. They can navigate the complexities of dynamic industries and build a strong foundation for sustainable growth and success. Developing a deep understanding of the specific needs, challenges, and dynamics of your chosen niche would enable you to tailor your solutions more effectively. Also, emerging AI startups looking to enter the fray should take inspiration from the strategies used by some of the successful startups in their respective geography, and carefully devise a market-entry strategy.
By Kesava Reddy, Chief Revenue Officer, E2E Networks Ltd.

Artificial Intelligence (AI) has become a key player in industries ranging from medicine to sales to software development. The AI industry is all set to grow to an estimated $305.9 billion in 2024. No surprise therefore that some of the most promising startups are developing a broad range of disruptive AI use cases across different industries.

These startups are agile and adaptable. Several are focusing on a specific problem within the industry instead of trying to be a general AI solution, like organizing time-consuming paperwork for doctors or research-cases for lawyers. This allows for a deeper understanding of the challenges and the ability to tailor the AI application for maximum impact. Most of these startups are built on open source AI stack, pulling together a combination of AI models and an AI architecture that’s designed to solve a specific industry problem. They leverage hyperscalers built for AI to host their solution, and ensure that they have taken care of data sovereignty when catering to enterprises.

Emerging AI startups looking to enter the fray should take inspiration from the strategies used by some of the successful startups in their respective geography, and carefully devise a market-entry strategy. Most importantly, they should focus on domains they understand, which will help them create a powerful value proposition. With a flood of open source AI models in the market, founders can pull together powerful and impactful solutions in a time-span that would have been unimaginable before.

From government bodies and manufacturing industries to defense, media and supply chain management, from ecommerce to edtech, from healthcare and fintech to drug discovery, eventually every sector will get upturned by AI. Hence, there is space for innovation in a wide range of domains. Below, I have outlined some of the verticals where AI is making a dent, some obvious and others not so obvious, which might help startups narrow down their focus and reach product market fit rapidly.

Machine Translation

Machine translation is one domain where AI has enormous potential. The machine translation software market is expected to grow at a rapid pace, from $9.3 billion in 2021 to $44.8 billion by 2031, at a CAGR of 17.3%. Machine translation platforms can be built using Large Language Models (LLMs), that enable translating of text from one language to another with exceptional accuracy and fluency. They can enable businesses and individuals to communicate and collaborate across different languages and cultures with ease.

Startups can look at building translation platforms by fine-tuning LLMs, and include support for multiple languages, including Indic languages. They can then provide high-quality translations to SMEs and Enterprises for a wide range of content types, including websites, documents, and emails. Many of these solutions can be built by leveraging open source LLMs like Llama3, Llama2 or Mistral, and then building an application architecture that uses these AI models.

Media and Entertainment

The global AI in media and entertainment market size is expected to grow from $14.81 billion in 2021 to $31.71 billion by 2026, at a CAGR of 16.4% during the forecast period. AI-powered platforms are already starting to enable businesses to create and personalize image and video content at scale. AI technology has reached the point where sophisticated platforms can now be built to generate realistic and engaging videos with human-like avatars using a combination of AI models like Stable Video Diffusion, Wav2Lip and others. This makes it ideal for a variety of applications, from e-learning and marketing to news reporting and virtual events, all of which are domains that are set to be transformed by AI.

AI-powered platforms can also help businesses create and customize high-quality soundtracks for their digital content, such as videos, podcasts, and advertisements. The way to build these platforms is through harnessing the latest audio synthesis models like Music Gen or Audio Gen, in order to generate audio through simple text prompts.

Startups can also think of advanced AI applications using a combination of LLMs and audio synthesis technologies, where LLMs are used to analyze emotions, tone, and context of the content and audio synthesis AI is used to generate soundtracks that complement and enhance the viewer’s experience. With Generative AI, the entire M&E sector is set to be upturned, and this is one of the key domains where startups can bring disruptions.

Customer Intelligence

The customer intelligence platform market size is estimated at $1.9 billion in 2022 and is poised to reach $7.0 billion by 2027, exhibiting a CAGR of 29.7%. Many customer intelligence platforms already offer AI tools for customer engagement, sales intelligence, and team collaboration. They also provide a central communications hub for businesses that include video meetings, contact syncing, call recording, automated speech recognition, conversational chatbots, instant call summaries, and more.

Now, with capabilities that AI models offer, startups can also build advanced intelligence platforms which can identify patterns for retention or acquisition of customers, and turn qualitative feedback into quantitative data for leadership.

Medicine

AI-driven drug discovery is revolutionizing the drug discovery market with faster and cheaper development. The global AI in Healthcare market is expected to record a CAGR of 48.1% from 2024-2029, with the market size estimated to reach USD 148.4 billion by 2029.

Traditionally, bringing a new drug to market is a slow and expensive process. AI can analyze vast datasets to identify promising drug candidates, optimize their structure, and predict potential interactions – all much faster than traditional methods. AI can also sift through complex biological data to find new targets for treatments, opening doors for diseases previously considered untreatable.

Finally, AI can analyze a patient’s genetic and molecular data to predict how they might respond to a particular drug. This paves the way for precision medicine, where treatments are tailored to individual patients, improving effectiveness and minimizing side effects.

Medicine and drug discovery is one niche where AI startups can build a product rooted in deep science, and with strong moats. No wonder it is one of the fastest growing markets.

Defense and Cybersecurity

All major countries, including India, are highly investing in next-generation technologies like AI to transform their defense capabilities. AI-driven tech is going to significantly reshape the landscape of defense technology, impacting everything from battlefield operations to cybersecurity. In future, military commanders would be leveraging AI for threat assessment, resource allocation, and even tactical planning, all supported by real-time data analysis. AI is driving the development of autonomous weapons systems, including drones and unmanned vehicles. These systems can perform tasks in dangerous environments, minimizing risk to human life.

AI is also a powerful tool in fortifying defenses against cyberattacks. AI systems can continuously monitor networks for suspicious activity, identify anomalies, and even predict potential attacks in real-time. There are numerous niche areas in this vertical where AI startups can build a defensible moat.

Finance

The impact of AI in FinTech is significant, with the market size projected to reach $61.30 billion by 2031, growing at a CAGR of 22.5% from 2022 to 2031. AI-driven tech is rapidly disrupting financial

markets and tools, transforming everything from trading strategies to how we manage our money. AI algorithms are used for high-frequency trading, analyzing vast amounts of market data at lightning speed to identify and capitalize on fleeting opportunities.

AI-powered robo-advisors are shaking up wealth management. These automated platforms use algorithms to create and manage investment portfolios based on individual risk tolerance and financial goals. This makes investing more accessible and affordable for a wider range of people.

AI excels at identifying patterns in data, making it a powerful tool for fraud detection. This makes it a ripe domain for startups to build solutions in. Financial institutions look to leverage AI to analyze transactions and flag suspicious activity in real-time. Finally, chatbots powered by AI, or conversational AI bots, are going to be transformative for customer service in finance. Within FinTech, AI startups can also look at threat analysis, anomaly detection, predictive models, and other solutions where AI solutions shine.

Legal and HR

60% of business leaders plan to enhance their HR department with increased AI and automation within the next 5 years. This is why emerging startups are using AI to power a suite of HR-related products aimed at retaining, training, and finding the best talent in the marketplace, thereby disrupting human resources as we know it. There are numerous challenges that remain to be solved in this domain, and AI startups can thrive by focusing on specific problems that have a huge impact in this field.

Similarly, legal research is another domain where AI can help law firms find cases faster. Using a combination of vector search and LLMs, platforms can be built which helps lawyers analyze documents using keywords or matching concepts as well as compose better briefs. Goldman Sachs estimates that 44% of current legal work tasks could be automated by AI.

Future Notes

We have entered the AI decade, and almost every industry vertical is going to be impacted by AI. In this article, I have listed several dynamic domains where AI can be transformative. AI startups looking to find a niche, should look at domains where AI can help create maximum impact, and focus on key problem statements in those industries. This will help them thrive and build a defensible value proposition, while creating positive change in the industries they serve.

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