How startups can navigate the generative AI landscape

The GenAI wave is here. It is loud, fast, and rewriting the rules of how software gets built and funded. But for founders, especially those outside the US, the big question is not just how to build with AI. It is how to win with it.

In one of this years’ webinars, Damian Janzi from Swisscom Ventures highlighted what makes GenAI different to what venture capital actually looks for and shared a practical view of what is working and what is not.

GenAI is not SaaS

It sounds simple, but the implications are big. Traditional SaaS relies on recurring revenue, predictable unit economics, and scalable customer success. GenAI, by contrast, comes with heavy compute costs, fast commoditization, and a constantly shifting competitive field.

Using GitHub Copilot as an example, Damian pointed out that while it generates around half of developers’ code globally, it only manages a 50% gross margin. Why? Because inference is expensive. Every user interaction burns GPU time. And when you are charging 12 dollars and spending 6 just to run the model, margins are tight from day one.

Creating value vs. Capturing it

Startups can absolutely create value with GenAI. Productivity gains are real, and apps can be built in hours using open, powerful APIs. But capturing that value is far more difficult. Users expect low prices, features are easy to replicate, and models are widely accessible. As a result, much of the value being generated leaks out, and few startups manage to hold onto it.

The speed at which GenAI apps can now be built lowers barriers but also floods the market with competition. Simply being fast or first no longer guarantees an edge, especially as OpenAI continues to release platform-native features that make it harder to stand out. Many startups building thin interfaces on top of existing models find themselves outpaced almost immediately. Competing with platforms like Copilot is nearly impossible without owning a niche or offering something truly unique.

Data drives the difference

This is where things get interesting. While code and features are easy to replicate, data is not. Startups with access to unique datasets can still build strong competitive advantages. A strong example shared was McKinsey’s internal chatbot, powered by its vast library of strategic documents. The value there is not the model, but the content behind it. The same holds for companies building niche vertical tools, where industry knowledge and workflows matter more than raw model performance. 

Startups founders have to remember that GenAI cannot be the entire product. They need to think beyond the model by building a workflow that solves a real business problem, creating a community around the use case, and creating engaging user experiences. In short, build more than a wrapper. Build something users do not want to replace just because a competitor added another feature. Fundraising success today depends on it.

Europe is not the US

Startups in Europe face unique challenges. Regulatory overhead. Infrastructure gaps. Smaller domestic markets. And a funding ecosystem that still moves more cautiously than its US counterpart. Damian mentioned that although the sentiment in Europe is getting better, the majority of capital continues to flow toward companies that demonstrate strong traction, have clear competitive advantages, and present a credible path to profitability or acquisition. This means founders must be sharper, leaner, and more deliberate. It also means being honest about what is needed to compete in a market where Microsoft and OpenAI are setting the pace.

Final Thought

Damian’s closing advice was practical. If you are non-technical, get technical. Learning Python or JavaScript to build your own MVP is within reach. Spend a few weeks. Test what you can build. Learn enough to speak with developers, test ideas, and own the product roadmap. And if you are fundraising, refine your story. GenAI is no longer a pitch by itself. Show that your product solves something painful. Show that it is more than a demo. Show that you can grow it, protect it, and make it matter.

Catch the Full Webinar Replay! Visit our Education Session Library to watch the full session and download the slides – free for all Swiss Startup Association members.

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