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The Emergence and Impact of LLM-Backed Startups

Updated: Oct 30, 2023

Based on my recent trip to San Francisco and Silicon Valley, this blog explores the transformative impact of Large Language Models (LLMs) on startups and the venture capital sector.

It sheds light on the revolutionary applications and the inherent challenges of leveraging non-proprietary LLM technology. The article underscores the strategic importance of unique data and addresses common misconceptions about LLMs, providing insights into optimizing these models for enhanced accuracy in the evolving tech landscape.


I was fortunate enough to be in San Fransico while the TechCrunch Disrupt event in San Francisco was on which served as a convergence point for venture capitalists, AI experts, and innovators, providing insights into the evolving preferences of investors in the realm of AI startups.

Large Language Models (LLMs) have emerged as transformative agents in technology interaction, propelling advancements in natural language processing and understanding to new levels not expected by the market. The applications of LLMs are diverse, spanning sectors like customer service and content generation, and have become the focal point of global VC interest, especially following the release of OpenAI's ChatGPT.

The Revolutionizing Role of LLMs

LLMs have not only revolutionized interaction but have also become pivotal in enhancing user content, aiding in crafting polite and friendly communications in challenging situations and generating content for websites. The venture capitalist community is particularly intrigued by technologies that have the potential to redefine business models, akin to how Salesforce revolutionised sales team management. The aspiration is to invest in technologies that don’t merely replace existing ones but reshape entire business models by eliminating tasks that traditionally required significant manual hours.

Challenges and the Non-Proprietary Dilemma

However, the journey is fraught with challenges. The rapid advancement in technology means that an LLM considered cutting-edge today may become obsolete in six months. Startups leveraging non-proprietary technology grapple with ensuring their technology stack remains relevant and the fine-tuning invested in their LLMs doesn’t become futile. The lack of proprietary technology also poses challenges in maintaining a protective moat against competitors, necessitating innovative approaches to stay ahead.

The Protective Shield of Unique Data

In this competitive and ever-evolving landscape, ownership of unique, proprietary data emerges as a beacon of defensiveness. It acts as a deterrent to competition and a treasure trove of insights, enabling startups to discern hidden patterns, and comprehend customer behaviours. The possession and effective harnessing of proprietary data can fortify a startup's competitive position, fostering innovation and ensuring sustained relevance in the market.

Understanding and Optimizing LLMs

A prevalent misconception is the perceived capability of LLMs in decision-making, reasoning, and data analysis. A common theme was staying away from start-ups that are using LLMs for this.

Integrating LLM models into chains with effective feedback loops, especially in enterprise environments where the current accuracy levels of models like ChatGPT4 are not sufficient. The intellectual property lies in the knowledge of how to chain the models and creating feedback loops to improve learning and enhance application accuracy to optimal levels, such as 95% accuracy.


The rise of LLM-backed startups underscores the pivotal role of innovative technologies that have the potential to alter business models, the strategic chaining of LLMs, and the possession of proprietary data in attracting venture capital investments. The reliance on non-proprietary technology presents inherent challenges, necessitating a focus on differentiation and strategic positioning.

As the market landscape continues to evolve, the ability to navigate challenges, leverage unique data, and optimize LLMs will determine the competitive and defensible stance of startups in this dynamic ecosystem. The journey of LLM-backed startups is emblematic of the broader narrative of innovation, adaptation, and continuous learning in the pursuit of reshaping the technological landscape and driving meaningful advancements in various sectors.

Note: I would like to thank Steven Goh for his great photograph while in the Bay Area and his invaluable insights


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