Faster Than SaaS: AI Startups Are Rewriting the Playbook for Growth

Towards the back end of 2024, The Financial Times published an interesting piece on how AI start-ups are monetizing at a speed never seen before, raising key questions about the sustainability of this rapid revenue generation. The findings, based on new data from Stripe, suggest that AI companies are scaling revenues at an unprecedented rate, far surpassing previous waves of hyped tech start-ups.

According to the report, artificial intelligence start-ups are reaching millions of dollars in sales within a year—significantly faster than traditional software-as-a-service (SaaS) companies. Stripe, a fintech giant processing over $1 trillion in annual transactions, analyzed payments data from the 100 highest-grossing AI companies using its platform. The results are striking: the median AI start-up took 11 months to hit $1 million in annualized revenue, compared to 15 months for comparable SaaS start-ups in 2018.

For AI companies that scaled past $30 million in annualized revenue, the timeline was even more aggressive—achieving the milestone in just 20 months. That’s five times faster than previous generations of SaaS companies, demonstrating the intense demand for generative AI products. As Emily Sands, Stripe’s head of information, put it: “Unlike past generations of software companies, AI companies pay substantial compute costs straight out of the gate, so are under pressure to build monetization faster.”

This rapid monetization has drawn the attention of investors eager to capitalize on AI’s commercial potential. Stripe’s customers include OpenAI, Anthropic, GitHub, Midjourney, and Mistral—some of the biggest names in AI today. These companies are driving a new wave of AI-powered tools, from coding assistants to voice and language translation software, and consumers are paying for them at an unprecedented scale.

The report also underscores AI’s global reach. More than half (56%) of AI companies’ revenues come from international customers. In countries like Singapore and Iceland, over 3% of the population has purchased services from the top 100 AI companies. This global appetite has propelled ventures such as London-based ElevenLabs, which specializes in AI-generated voices, and Germany’s DeepL, a leader in AI translation.

However, alongside the enthusiasm, there are looming concerns. A Goldman Sachs report from this month warned that AI companies are no longer “capital-light businesses,” highlighting the enormous infrastructure costs required to develop and deploy cutting-edge models. OpenAI, for instance, is generating an estimated $3.6 billion in annualized revenue, but it is also burning through well over $5 billion a year to train and refine its models.

Byron Deeter, a partner at Bessemer Ventures, notes that larger, more established software companies face challenges in adapting to AI’s rapid pace. “We’re seeing lots of [AI] companies going from zero to tens of millions of dollars [in revenue] in a couple of years,” Deeter observed, underscoring the edge that AI-native start-ups have in today’s market.

As AI continues to reshape industries, these Stripe data suggest that AI start-ups aren’t just capturing headlines—they’re capturing revenue at a breakneck pace. Whether this growth is sustainable in the long run remains an open question, but for now, the AI gold rush is well underway.

References

• Madhumita Murgia (2024). AI start-ups generate money faster than past hyped tech companies. Financial Times. Available online. Accessed 9 February 2025.