Startups are leading the generative AI charge by experimenting with new applications across industries, pushing the boundaries of what’s possible, and advancing the technology’s potential. They are the engine of gen AI innovation in a rapidly evolving landscape. Chamath Palihapitiya, Founder and CEO, Social Capital: “I think AI is more than just an ongoing shift: it’s a hyper-disruption. The traditional software industry, with its complex products, high cost, balkanized features, and licensing models, is being completely reimagined.”
We asked 23 industry leaders and investors their perspective on the most critical AI and Cloud AI innovations, trends, opportunities and challenges that startup leaders need to be aware of in 2025 and beyond in Google Cloud’s Future of AI: Perspectives for Startups 2025 report.
The evolving role of AI agents in business
Among the trends discussed, AI agents were the leading topic of conversation. The growing innovation of AI leaders with agents comes as no surprise, but their collective vision of how these agentic systems will evolve reveals an intriguing perspective on the increasingly sophisticated interactions we’ll soon encounter and their business implications.
The opportunities seem quite expansive. For example, Matthieu Rouif, Co-Founder and CEO, Photoroom, emphasizes AI becoming increasingly adept at recognizing and responding to human emotions; this could enable AI systems to tailor content and experiences to individual emotional responses in ways that create more meaningful connections. According to Harrison Chase, CEO and Co-Founder, LangChain; “To truly leverage agentic systems, I want them to scale beyond just what I can ask them to do– to be ‘ambient agents,’ running in the background, always on, monitoring streams of events, and alerting me only when something interesting happens or when they need my help.” Such intelligence and deep personalization could transform customer experience and business relationships, marking a significant evolution from today’s task-oriented AI to tomorrow’s empathetic digital companions.
Besides the impact on customer experience, according to Jennifer Li, General Partner, a16z, AI agents are also transforming the developer experience. “ Coding has turned out to be one of the most mature spaces in AI because it has more easily verifiable results and a fast feedback loop. You can check if the results are correct, and there’s already a lot of tooling, from testing to validation, to help figure out if the model has performed the way you want. It can be as simple as autocomplete or as involved as an agent building a full blown app.”
Rethinking AI infrastructure for the next generation
Yet for all the amazing leaps AI is offering, almost none of it would be possible without the right infrastructure, which is another major focus topic.
“Tight synchronization and massive compute requirements push infrastructure to never-seen-before levels of compute density and capability,” said Amin Vahdat, VP & GM for Systems and Cloud AI, Google Cloud.
The future infrastructure landscape will likely be characterized by modular architectures that combine smaller, specialized models across different data modalities, supported by sophisticated orchestration and observability layers. Mayada Gonimah, CTO & Co-Founder, Thread AI, highlights that: “Integrations and infrastructure for observable workflow management will become even more critical parts of the AI stack. Companies will need interfaces that let them insert AI in their existing workflows and test them in parallel to existing processes. I think being more intentional around where you embed AI and having the tooling around observability is going to be key moving forward as we build these production-worthy AI-native workflows.”
Infrastructure efficiency will become a critical competitive differentiator, with organizations that achieve twice the efficiency gaining significant market advantages. Arvind Jain, CEO, Glean, emphasizes the importance of designing your infrastructure to be more agnostic to model and tooling advancements. “Predict what’s coming and enable plug-and-play where feasible to take advantage of updates without massive overhauls or disruptions.”
Cloud providers will continue to play a central role, but successful organizations will build flexible systems that can seamlessly integrate new models and technologies. For a deep dive around impactful trends like multimodal AI, customer experience, enterprise search, and more technical advancements, check out the full report.
Areas investors are prioritizing for AI startups in 2025
The AI investors in the report are zeroing in on startups that deliver concrete solutions to real-world challenges, moving beyond the initial AI hype. Salim Teja, Partner, Radical Ventures, is focused on startups that use AI to address real problems such as improving health, fighting diseases, combating climate change, and addressing the affordable housing crisis through robotics in construction.
Having data alone isn’t enough — investors want to see strategic use of high-quality, secure data that enhances AI performance in specific applications. Venture capitalists are particularly drawn to solutions that boost productivity and transform business operations, especially in developer tools. Raviraj Jain, Partner, Lightspeed, points out that “all organizations have to think like VCs (Venture Capitalists)—even though you’re beholden to quarterly results, you still have to think five to ten years ahead and how your organization and market structure will change, and how critical it will be to leverage AI as part of that change.”
The winning formula? A clear competitive edge, path to profitability, and deep integration into user workflows. According to Crystal Huang, General Partner, GV, “if your product is easy to implement, it’s just as easy to uninstall. Products need to be stickier to create lasting value, which means being both indispensable and deeply integrated into the user’s workflow.”
Leapfrog the competition and create a defensible position
In today’s competitive AI landscape, building a defensible market position requires a sophisticated strategy that goes beyond simply implementing the latest models.
David Friedberg, CEO, Ohalo Genetics, put it this way: “If you’re just an LLM wrapper, it’s going to be hard to build a sustainable business — you’re likely going to get commoditized away. Businesses need an engine of value creation that persists with an initial advantaged offering with continuous improvements. 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.”
Douwe Kiela, CEO, Contextual AI highlights the need for speed and focus in the AI market. “Move fast. Time to market is the most important thing for a startup, and the market is now. Things are moving incredibly fast in AI, so you have to make sure you’re not left behind.”
Staying ahead of the competition is not just about the technology. How AI companies monetize and sell their AI is as important as how they build it. As Jerry Chen, Partner, Greylock, states “your competition is no longer against the incumbent, it is against the incumbent’s business model.”
Looking ahead
The breakneck pace of change being driven by generative AI means that startups are facing unprecedented challenges. At Google Cloud, we’re collaborating with researchers, founders, startups, investors, enterprises, partners, and public sector agencies to think critically about how our responsible AI solutions can meet the needs of employees, customers, patients, and citizens.
Our hope is that the Future of AI: Perspectives for Startups 2025 report will shed more light on one of the fastest-moving technologies our industry has ever seen — and in particular, provide exciting guidance to founders who are imagining the next wave of innovative AI startups.
No matter where you are with AI adoption, we’re here to help: Book your generative AI consultation today, get up to $350K in cloud credits with the Google for Startups Cloud Program, or contact our Startup sales team.
