Conversations on AI startups building wrappers on foundational models have been ongoing for the past few years. The debate about the value of startups centred on these wrappers is more complicated than it initially appears, with no conclusive verdict reached so far.
In the recent Google Cloud report titled ‘Future of AI: Perspectives for Startups 2025’, various startup founders and venture capitalists (VCs) shared their insights on AI trends and predictions. One notable perspective came from David Friedberg, entrepreneur and CEO of Ohalo Genetics, who believes that it’s not enough to just be an LLM wrapper.
“If you’re just an LLM wrapper, it’s going to be hard to build a sustainable business—you’re likely
going to get commoditised away,” said Friedberg, who believes that businesses need a mechanism for value creation that sustains an initial competitive advantage through ongoing enhancements.
“This will typically come from proprietary data generation, which is used to continuously improve model performance, or network effects that lock-in access to data or customers,” he said.
He believes that startups need to be agile and adaptable, but at the same time, they must also deliver unique value.
While Friedberg’s thoughts may be coming from an investor’s point of view who is probably looking for long-term value from startups, a number of AI startups springing up are mostly AI wrappers.
This article was originally published on Analytics India Magazine >
