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The role of data for AI startup growth

Author

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  • Bessen, James
  • Impink, Stephen Michael
  • Reichensperger, Lydia
  • Seamans, Robert

Abstract

Artificial intelligence (AI)-enabled products are expected to drive economic growth. Training data are important for firms developing AI-enabled products; without training data, firms cannot develop or refine their algorithms. This is particularly the case for AI startups developing new algorithms and products. However, there is no consensus in the literature on which aspects of training data are most important. Using unique survey data of AI startups, we find a positive correlation between having proprietary training data and obtaining future venture capital funding. Moreover, this correlation is greater for startups in markets where data is a major advantage and for startups using more sophisticated algorithms, such as neural networks and ensemble learning.

Suggested Citation

  • Bessen, James & Impink, Stephen Michael & Reichensperger, Lydia & Seamans, Robert, 2022. "The role of data for AI startup growth," Research Policy, Elsevier, vol. 51(5).
    • Handle: RePEc:eee:respol:v:51:y:2022:i:5:s0048733322000415
    DOI: 10.1016/j.respol.2022.104513
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    Keywords

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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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