There are 4 states AI founders and entrepreneurs can find themselves when it comes to building and funding AI Ventures.
There is nothing more clear than position those 4 states on a 2x2 chart.
So if you are building AI, try to identify in which quadrant you are in and write in the comments. You might want to shift from one quadrant to another, or you might learn that you don't want to be in a certain quadrant and pivot to another one.
Here are the 4 states:
1) You are building a in the Foundational/Scientific layer space and needs massive amounts of cash so you raise VC or PE money and lots of it. You are probably building the next AI lab training new models and need that capital for compute power and energy costs. You might work on a big scientific problem in medicine, climate, education or even in defence and you need the best research talent to train models for accuracy and precision.
2) You are building in the application layer space and raise lots of capital - You are probably building for a specific sector like in legal tech, or industrial solutions. You are using existing models like Gemini, GPT or Sonnet or even world models, but you don't need the capital to train your AI model. You need the capital to move fast, and be the first mover in your industry allowing network effects and scalability.
3) You are building in the application space but you bootstrap and don't plan to raise - You might use tools like Codex, Claude, Lovable and others to build your application. It might be a small project you are building to solve a local problem, or you have a conscious decision to keep all equity and move slower. At a certain point where you get a signal for PMF you might want to go up and raise capital where you will move to quadrant 2.
4) You are building a in the Foundational/Scientific layer space but you do not need hundreds of millions in capital - You are probably doing research in academia or even independently, but you are far from building a commercial proposition. You are trying to solve a creative problem and need capital to run your research but scaling it might not be a priority, because you do not have the technical or scientific validity to scale it. You might move to the first quadrant at some point of your research.
Which quadrant are you in and where do you want to be?
👋 Hey there, I’m Illai. I share with readers questions, insights and learnings about building startups, venture capital, Artificial Intelligence and entrepreneurial career paths. You can find more: Follow me on Linkedin| Get updates about workshops and courses | ZIZO Product Course | Between App
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