INSUBCONTINENT EXCLUSIVE:
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.If you can recall
February, we dug into the question of AI startup gross margins
Venture shop a16z had published an interesting blog on the subject, arguing that it may be the case that AI-focused startups will enjoy
strong gross margins, but perhaps not as strong as those posted by SaaS companies.Modern software startups (SaaS companies) have some of the
highest gross margins in business, delivering their digital services over the Internet at little cost
Their high-margin revenue has made them incredibly valuable to private and public investors alike
To see a16z draw a line for AI gross margins a little under SaaS, then, was notable
AI startups might earn long-term lower revenue multiples than SaaS firms, and, if so, they might need to adjust their valuation
expectations.Since that nerdy interlude, the world has fallen apart
Shit, as they say, has changed.But after our first look at the world of AI margins, asking a number of VCs to weigh in on the matter, we
wound up talking to one more VC, David Blumberg of Blumberg Capital, who had some interesting notes on the AI margin matter to share from
their margins back into our heads
So, before Q2 really gets under way, a little more on AI and COGS.
