The year 2023 saw a number of technological breakthroughs, and 2024 is shaping up to be the year when generative AI’s business potential comes to the forefront. According to a recent Prosper Insights & Analytics survey, today, more than half of professionals are excited to use generative AI or are already using it. Companies across the globe are now racing to unlock the value of the technology, marking the beginning of what could be described as an AI Gold Rush. Now the question is how to make the most of generative AI and transform this promising technology into tangible corporate value. According to Fred Schonenberg, founder, and CEO of VentureFuel, an independent innovation advisory, the answer is through corporate innovation driven by partnerships rather than through standard venture investment.

“If 2023 was the year of generative AI, then 2024 is the year generative AI gets applied to business in a meaningful way. Gen AI is evolving from hype to tangible action and true value creation,” Fred expressed in an interview.

Gen AI clearly offers a number of lucrative opportunities. A recent McKinsey report identified no fewer than 60 potential use cases for generative AI, with global revenue projections between $2 and $4 trillion. The report also found that approximately 75 percent of the potential value from generative AI falls under one of four categories: customer operations, marketing and sales, software engineering, and R&D.

Regarding customer operations, generative AI can automate tasks that consume valuable employee time, in which their efforts could be better spent on more challenging tasks. In marketing and sales, generative AI opens doors to unprecedented levels of personalization and engagement by analyzing vast datasets and identifying patterns and preferences. Software engineering benefits from generative AI by accelerating development cycles and improving code quality. And in R&D, generative AI can act as a catalyst for innovation, simulating and modeling scenarios that offer insights to drive breakthroughs in product development and scientific research.

Fred explained, “A lot of organizations understand the use cases of where they want to apply AI, but they don’t have the expertise or resources to implement it properly. Startup partnerships allow these organizations to start on 3rd base with existing, vetted solutions that can be applied today to real business challenges, and then scaled across the organization for competitive advantage.”

Over the past 24 months, thousands of startups leveraging generative AI to solve business challenges have sprouted. In fact, a recent report from Stanford’s Institute for Human-Centered Artificial Intelligence (HAI) found that while global investment in AI decreased in 2023, funding for generative AI startups was up nearly 9x. As Fred explained, “There are gen AI startups working on nearly every business challenge enterprises are looking to tackle. Partnering with these rapidly evolving startups gives corporations immediate insights on these new technologies, but also immediate value creation by applying it to tangible business use cases.”

This process requires a strategic approach: identifying market opportunities, solving problems, piloting solutions, and subsequently scaling successful initiatives. Essentially, a cycle of learning, testing, building, and investing.

“Success can be achieved in a lot of ways: through pilots, proof-of-concept partnerships, and even accelerators such as Comcast NBCUniversal LIFT Labs’ program which most recently focused on multiple areas of AI. These collaborations give corporations the opportunity to connect with promising startups that bring fresh creativity, agility, and innovative solutions to the table,” said Fred. The startups benefit from access to large companies’ resources, deep industry expertise, and opportunities to grow through commercialization. Corporates get to learn and test rapidly and efficiently, avoid large investments of time and money, and reduce the risks generally associated with exploring new technologies. It’s a symbiotic relationship that drives significant value for both sides.

These partnerships will be even more necessary during today’s VC funding crunch, which is expected to continue into this year. VCs simply aren’t investing with the same enthusiasm as in previous years. And even as they focus their existing efforts on AI, experts predict that an eventual AI cooldown will see venture funding towards AI startups balance out or drop as well. Corporate partnerships, however, will likely continue to drive innovation in the sector virtually unhindered by the funding drop, because companies and their clients always have new needs that need to be met and new pain points to solve. Startups will be the ones to help solve them.

Fred said, “At VentureFuel, we’re seeing incredible gen AI applications driven by the collaboration of corporates and startups. For example, as a result of the accelerator we operate for Comcast NBCUniversal LIFT Labs, the global media and technology company’s HR department is now working with conversational AI platform NLX to power employee inquiry interactions through a 24/7 self-service chat option.

Another case of a generative AI corporate-startup partnership driving innovation is stock agency Getty Images partnership with AI research startup Runway. The collaboration is bringing Getty’s enterprise customers a solution for generative video models that can be trained on organization’s proprietary datasets. This helps enterprise users in streamlining the creation and customization of high-quality content, an increasingly important consideration as enterprises race to keep up with consumers expectations for personalized experiences in the age of AI.”

As we navigate the AI Gold Rush corporations will continue to race to keep pace with industry leaders who have already adopted generative AI. “This is a technology where speed to market matters, as the models learn from testing leading to exponential compounding results. So, corporations lingering on the sidelines risk falling behind their peers and missing pivotal breakthroughs and new applications that can cost market share and relevance,” Fred said.

There is no doubt there is corporate value in generative AI for nearly every enterprise. But for those who will be successful, it’s about how you’re learning, testing, building, and investing with the least risk to identify market opportunities and solve problems. And one of the ways established companies are doing this is by collaborating with startups, experiencing real-time what works for their businesses. Many other organizations will soon be following suit.