The top industries in which AI startups are booming

AI has entered our daily life, but what about its impact on tech startups? Find out more about how AI is revolutionizing the startup scene.

5 min read

Even before ChatGPT kick-started the AI hype, we had already entered a new generation of AI-based products and services, especially in the startup universe. Large Language Models (LLM) and AI are playing a major role in development, as an increasing number of business founders are building the fundament of their early-stage company on artificial intelligence, on a vertical and horizontal level. Startups with a sole focus on AI work on one fundamental solution to serve various industries, while startups focusing on solving concrete existing problems for a very specific type of customer use AI as an intelligent tool to further enhance their products. 

This is reflected in the constantly booming AI market: While in 2021 Artificial Intelligence market revenue was below 100 billion U.S. dollars, in 2022 it nearly reached 150 billion and in 2023 it is expected to beat this number considerably. By 2030, it is predicted to reach two trillion U.S. dollars. North America holds the lion's share of the AI market and is expected to continue its dominance due to factors such as the adaptation of advanced technologies in various medical applications. One of America's biggest health solutions companies, CVS Health, for instance, is collaborating with Microsoft to leverage its AI expertise in cloud computing. Europe also shows steady growth, with a share of 20% of the worldwide AI market (source: statista.com). 

Visual with a chart representing the AI market size in billio US dollars. It shows an upward trend starting from the year 2021 to 2030.

Not surprisingly, investments in AI startups are also growing: In Q1 of 2023, there was a significant increase in investment in early-stage AI startups. Especially in seed and series A rounds, fundings in some areas increased by up to 50% compared with Q4 of 2022 (source: carta.com). Thus, now might be the time for tech startups with an AI-based approach to rise and shine. So, which are the industries in which AI startups are gaining territory and momentum?

Logistics and transportation

In the logistics sector, the lack of supply chain and operational transparency is a significant barrier that can be overcome by machine learning and predictive analytics. Depending on the goods being transported, this can have a crucial impact. Take pharma products or food for instance: Life-saving medicines, vaccines, and medical devices have to be delivered on time to ensure medical treatment. Food can alter its texture, coloring, and taste when not stored at a specific temperature. With the goal to spot delays and malfunctions in logistics and transportation, AI leverages data from sensors and data management systems, improving delivery timelines, workflows, and processes. Thus, AI startups in logistics can enhance timely package delivery and increase supply chain processes. The logistics startup PAXAFE for instance enables businesses to streamline their supply chain processes and make informed decisions on risk assessment. Companies can identify and address any issues before they become costly and damaging whilst reducing costs and saving resources.

Cybersecurity

Cyber attacks are getting smarter at an alarming rate, with ransomware attacks happening every 11 seconds. Businesses need to be protected against a host of unknowns: This is where AI comes into play. AI-based cybersecurity solutions can examine all digital touchpoints of the network, automating security management and enabling predictive cybersecurity tactics. The industry leader SenseOn, for instance, uses AI for anomaly detection, being agile and adaptive to changing threat actors and techniques.

Cleantech and energy

Due to the circumstances, pressure on the cleantech and energy sector is increasing on a daily basis. Unanticipated outages need to be avoided, downtime reduced, and maintenance made sustainable and affordable. AI integrations can help to reach such energy goals.

Especially in the renewable energy sector, there is a growing number of startups offering the latest AI technology to provide solutions to green energy and resources challenges.

From water analysis, and reduction of carbon emissions, to solar and wind power—unlocking the power of green energy and reducing environmental impact is primordial to AI startups in this sector: The early-stage cleantech startup Enlitia, for instance, is developing an Algorithm Ecosystem for sustainable energy companies which measures portfolio performance and data quality, improving energy availability. 

Fintech and insurtech

The fintech and insurtech sector is on the verge of an AI-infused revolution. Amongst the most popular use cases of AI in the finance industry are intelligent software robots for processing loan applications, creating insurance plans and products based on customers’ data, and detecting fraudulent transactions. Also, AI startups like Moby Analytics can help auditors and investors gain in-depth insights and predictions to analyze financial and operational data. In the insurance sector, AI-based tools are unlocking new possibilities for insurers, brokers, and commercial property owners to measure and mitigate risks in real time. For this purpose, the insurtech startup Intelligent AI creates digital twins of buildings through a combination of satellite data, IoT, and data analytics. 

Revolutionizing HR Tech, construction tech, and customer service 

Another sector that is being revolutionized by AI is HR Tech. AI-powered tools like analytics, performance management, and learning management help organizations measure how their employees are doing and predictive data models can be used to identify opportunities for talent management and retention and improve workforce performance. AI technology can be used to analyze data from multiple sources and provide actionable insights that can help improve management efficiency and effectiveness, thus maximizing productivity and scalability, for example via software such as Impro. Also, talent management and acquisition can be improved by AI: Screenloop's software provides transcripts, conversational prompts, hiring collaboration, score responses, etc. to ensure high-quality interviews without any biases. 

In the construction industry, everyone is talking about generative design, a technology in which 3D models are created and optimized by cloud computing and AI.

By checking cut and fill volume measurements, machine uptime and downtime, previous projects, or any other input, algorithms can help reduce costs and risks and, hence, build smarter and more efficient buildings.

Increasing the sustainability of buildings is also the goal of the proptech startup Augmenta, which is to create the future of architecture, engineering, and construction using machine learning, computational geometry, and advanced optimization.

By the way, how was your recent customer service experience? Some of the most visible applications of AI and LLM models are chatbots, meant to enhance customer service and engagement due to their 24/7 availability and instant resolution of queries. Especially chatbots available for the travel industry or on e-commerce websites are powered by AI and programmed to provide instant answers to a range of common customer queries.

Yet, there is more to come ...

With AI being present in many aspects of our daily life, some experts argue that the AI revolution has already arrived—however, there is more to come, as there are three stages of Artificial Intelligence and we have only reached the first one: The AI systems that exist today, such as chatbots and virtual assistants, are based on Narrow Intelligence (ANI). General Intelligence (AGI) is the next evolution, with systems designed to have human-like intelligence with learning and problem-solving capabilities. On the top of the iceberg is Superintelligence (ASI), an advanced form of AI that surpasses human intelligence, able to create new technology and make decisions beyond the scope of human understanding. Keeping in mind the current tendencies, it can be argued that AI is not only having an impact on our daily life but also on the startup ecosystem.

Using the latest technologies, communicating products and services efficiently and effectively, and gaining investment is crucial for emerging businesses and early-stage startups that want to make their mark in the sector. 

We at The Branx sometimes use AI-based tools to get inspiration for our creative processes in case we got stuck on the way. However, we rely on the talent of our international team in order to create outstanding branding, communication, web, and UX/UI solutions for early-stage startups. If you need help with your visual and verbal identity for your business, we are happy to lend you a hand. Get inspired and have a look at the projects we completed together with AI startups.

About the author

Tamara Hofer
Copywriter & Marketing Assistant

Tamara is our multi-lingual expert in copywriting and storytelling. She also helps with all digital marketing efforts.