Why AI startups' economics will likely improve over time – TechCrunch

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.