Nowadays, both capital and media coverage follow AI stories with eagerness. About 80% of venture financing is invested in companies that are positioning themselves as AI-driven. The same is true for news and publications in specialised media, which talk about this technology more than ever before.
Very few technologies have received the same kind of attention in such a short span of time, and more and more AI startups are emerging, hoping to get a share of all that funding and coverage. The market has grown so highly competitive that it’s extremely hard for new players to stand out.
To succeed, businesses need to position themselves through something more meaningful than just the use of artificial intelligence because at this point it’s simply an instrument that’s become available for everybody. Explaining why people should choose exactly their product over others is the main communication challenge for AI startups in the coming months.
Why Companies Can No Longer Position Themselves Through AI Alone
Many founders consider the fact that they use artificial intelligence to be enough to attract customers and capital by itself. That may have been the case 2-3 years ago when the technology was still extremely young, and people wanted to ride the new wave before it became a tsunami. However, today this market is already oversaturated and, more importantly, extremely dominated by several major companies — all of which actually negates the advantage of being simply an “AI company.”
In the first half of this year, OpenAI and Anthropic together raised more than half of all venture AI funding just by themselves. Giants like that effectively define what it means to be an AI company. So when a young startup looking for venture financing presents itself in a similar way, investors will inevitably compare it with such market leaders and expect the same level of quality. But realistically speaking, an early-stage startup cannot look favourable when compared to industry titans like that.
For this reason, there is only a small amount of attention and, more importantly, funding that trickles down to young companies in this sector. Startups have to fight for capital and coverage alike, and if all they have to offer is being an AI company, they are unlikely to win. Senior decision-makers even confirm this, as two-thirds of them think many startups sound very similar and are hard to differentiate.
To distinguish themselves from others, AI companies need to find something that makes them actually different and talk to stakeholders through the prism of that unique feature. Because if replacing your company’s name with a competitor’s in a media pitch changes nothing, it would be almost impossible to receive any attention from the market. Your positioning simply isn’t strong enough.
How AI Claims Are Checked Today
Artificial intelligence models advance too fast and rarely hold leadership longer than one to two months. To bring real value, a company’s positioning should stay relevant for years. That’s why a business building its reputation on the idea that its model is better has to prove it again and again. Eventually, it will lead to the exhaustion of all the resources and capital, while competitors with greater reserves will continue the race.
This was confirmed in the wave of AI-washing that happened in the last couple of years. Dozens of firms from unrelated fields, such as gold mining or footwear, rebranded themselves as AI companies. At first, their valuation rose by more than $8 billion, but the following reckoning was inevitable.
One of the most striking examples was the ecological footwear brand Allbirds. It struggled with financial problems for years, and this spring the company unexpectedly claimed to be an AI company. Its stock price briefly rose 4 times, but by the end of July it returned to the same level as before the rebranding. In other words, the short-term attention had failed to create lasting value because the company itself had not changed in any real way.
That’s why durable positioning, especially for startups and smaller companies, should come from assets whose value does not drop when a new model comes to the market. It could be unique customer data or a deep specialisation of some kind. The point is, investors today no longer treat AI exposure as something special and reward actual execution and ability to bring profit.
How to Fix AI Startup Positioning: Three Rules to Survive
Positioning is often considered to be a communication task, but it ultimately depends on the company’s strategy. It reflects what the company does and how its product supports the value the company promises to the public. Communication simply makes those strategic decisions visible.
There are three main rules which can help firms driven by artificial intelligence to better position themselves and stand out among competitors.
AI startup positioning works best when it centres on more than the underlying technology. Three rules make it durable: position around the specific workflow you solve, define a clear scope instead of overpromising, and publish transparent proof of how the AI operates, including where human oversight remains.
Position Around the Workflow
Instead of describing the technology, it is much better to talk about the processes your business changes. Like in any field, a company should cover some real needs that customers have, and people rarely need AI without a purpose.
For example, Bretton AI, which raised $75 million this winter, specialises in financial crime compliance and anti-money laundering investigations. It has completed more than 1.2 million investigations with customers such as Robinhood and Mercury. Here’s a good example of building credibility through a unique and well-defined use case.
Now compare it with Builder.ai, which promised that building software would be “as easy as ordering a pizza.” A broad claim like that is almost impossible to defend and prove. This one-liner does nothing to explain how exactly it would help or what it would change. The company had no actual offer to deliver on and eventually went bankrupt.
Define the Scope
The next important step is to decide at what scale your company is going to work. Founders often resist this because they consider limiting their business to a smaller scale to be a sign of weakness, but in reality, it often helps defend your positioning.
In 2024, Klarna announced that an AI agent would replace 700 jobs in what sounded like a real breakthrough. But just a year later, the company limited its use of artificial intelligence due to its higher cost and restored the removed jobs. Bold announcements made the company a victim of its own words.
This is precisely why narrowing your focus in advance can help avoid uncomfortable backtracking and explanations to the media later on. If you don’t overpromise, you won’t risk underdelivering.
Publish the Proof
Positioning only works if people believe it and if there is tangible evidence to back it up.
In order to attract customers and investors alike, a company should clearly write out how it works. Not just that it “has AI,” but also which tasks it covers, whether human oversight remains in the workflow and how control over AI actions happens.
Senior decision-makers say that this kind of transparency is among the most important things that can convince them to invest. Anyone can claim to use AI, but a clear explanation of how your product works often ranks higher in value than even case studies or technical benchmarks.
FAQ
What is AI startup positioning?
AI startup positioning is the strategic case a company makes for why customers, investors and media should choose it over competitors using similar underlying technology. Because most AI models converge in capability within months, durable positioning depends less on the technology itself and more on workflow specialisation, defined scope and verifiable proof of how the product actually performs.
Why can't AI startups position themselves on technology alone anymore?
AI startups can no longer position themselves on technology alone because the market has become too crowded and consolidated around a few dominant players. When a small startup presents itself simply as an AI company, investors inevitably compare it with the market leaders, and it cannot win that comparison on technology terms.
How should an AI startup position itself to stand out
An AI startup should position itself around a specific workflow, a defined scope and transparent proof of how its product works, rather than around the fact that it uses AI. That means naming the concrete problem it solves, resisting the urge to claim it serves everyone, and publishing details on data handling and human oversight.
Conclusion
In the late 1990s, during the dotcom bubble, dozens of companies added “.com” to their names to attract investors, and they indeed raised millions of dollars. When the bubble began to burst, they changed their names back to their original names and once again won over competitors because the value of “.com” branding disappeared.
AI companies show signs of being on the same path, as more and more businesses use this tool. In the near future, calling yourself an AI company will likely mean the same as calling yourself an internet company. It’s just the standard today and doesn’t bring any inherent value or differentiation on its own.
To stand out as a solid brand, it is much better to build your reputation around tangible client needs that a company can meet. In contrast to new technologies, those needs don’t change so quickly. And so they won’t be completely erased if a smarter, more efficient model gets released next month.
If your company is wondering how to position itself in the crowded AI market, Drofa Comms can help you build reputational capital that supports your business goals.
