Survey Finds Over Half of AI Startup Founders Are Using Four Or More Foundational Models

Findings reveal key insights into how founders are building startups in the GenAI era

Costanoa Ventures, a boutique early-stage B2B venture capital firm, released findings from a survey of founders building in the AI space, “Building an AI-Native Startup,” offering a snapshot of the AI-native startup ecosystem. The survey includes insights into how founders building in AI approach hiring AI talent, the tools they use, and the challenges that keep them up at night. 

“Today’s early-stage startup founders are the first GenAI-native generation,” said Martina Lauchengco, partner at Costanoa Ventures. “GenAI is reshaping how founders build products, who they hire and how they scale. What surprised us was how much use of foundation models beyond GPT is growing and how early they focus on go-to-market.”

One key area the survey looked at was the use of foundational models. The survey found that nine out of ten founders (89%) surveyed are using some version of GPT in their startups, with more than half stating they use four or more models. It’s a strong indicator of the role larger models are currently playing in the startup ecosystem and innovation. 

Key findings from the survey reveal:  

How founders use models, data and tools to build AI products

• Over half (54%) of all respondents are using four or more foundation models; 75% use more than one model.
• Nearly nine in ten founders (89%) are using some version of GPT, followed by Llama and Claude at 40% each.
• Pre-seed and seed stage companies are twice as likely to use Mistral as Series A or later companies.
• Just shy of 90% of respondents are using some type of AI tooling either to build their platform or to enhance their own work, with the majority of tools supporting infrastructure and MLOps. Most popular coding tools include: Cursor.ai, Github co-pilot and Supermaven.

“The foundation model landscape is changing fast. On one hand, the converging trend on model performance has led to people choosing a variety of models; on the other hand, lots of people still choose the top 3 shops as a more future-proof option as the state of the frontier keeps moving forward,” said Rebecca Li, data and AI investor at Costanoa Ventures.  

How founders think about hiring and AI expertise

• 50% of founders are located in the Bay Area with second-time founders 33% more likely to start their companies in the Bay Area, citing proximity to talent and investors as a driving force.
• Just under one-third of companies founded after 2022 feel the need for a cofounder with a PhD or background in applied models. Companies with an AI cofounder are significantly more likely to hire an engineer with academic AI or AI research experience (90% and 61%, respectively). 
• Nearly 54% of companies prioritize go-to-market roles for early hires.

“This reaffirmed what we see: the companies getting the most leverage from AI today often aren’t founded by people with an AI PhD or years of experience in AI. They’re made up of entrepreneurial, quick study engineers who have the curiosity and ‘just build’ mentality to keep up with the bleeding edge in AI,” said John Cowgill, general partner at Costanoa Ventures.  

What keeps founders up at night

• Repeat founders are twice as likely to mention “noise in the market” as the most painful part of building in AI right now.

• Only 16% of pre-seed and seed founders mention talent as a major challenge, but of those who did, 80% are repeat founders. 

“The core challenges of early stage startups are the same whether you’re an AI-native startup or not. These problems have been the same for decades, but now we’re adding a layer of complexity as teams learn how to harness the power of AI,” said Amy Cheetham, partner at Costanoa Ventures. 

Lauchengco added, “It’s fascinating to see how quickly things are changing in how founders build startups. But what will be most interesting is seeing how responses evolve over time. It’s truly a new era.”

Costanoa Ventures surveyed 30 founders who collectively raised $700 million in venture funding, with $70 million collectively raised by the pre-seed and seed companies who shared their funding— 21 of whom built their companies within the last two years. The survey included founders from both Costanoa Ventures’ portfolio companies and many unaffiliated with the firm. The companies surveyed encompass a broad range of AI use cases, from planning and booking trips to customizing sales outreach to improving IT workflows. Only companies with outside funding were included in the final results.

The full survey is available to view here. 

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