Select Language:
User retention is the most critical factor investors consider when evaluating whether an AI startup is worth funding, according to a partner at a venture capital firm.
“In the AI era, many people are eager to explore new innovations. When a new product or service is launched, consumers might pay for it initially, but by the second month, they often stop. This lack of retention can be costly,” he explained during a panel at the opening session of the 2025 Inclusion·The Bund Conference.
He emphasized that once a user drops off, it can cost over ten times more to win them back, which is nearly impossible in practice. Therefore, customer loyalty remains the key criterion for determining a project’s potential for investment.
“Strong user retention indicates a company’s capacity for future growth,” he added.
He pointed out that startups in today’s AI landscape are similar to those in the personal computer or mobile internet phases. To sustain long-term success, companies need to focus on core business principles.
Regarding which AI applications have true growth prospects, he noted that the often-overlooked but practical technologies tend to outperform flashy innovations.
For example, the most successful AI commercialization efforts last year involved tools for automated meeting notes, like Abridge and Plaud. These solutions, while technically straightforward, address practical needs and can be expanded easily.
He forecasted that consumer-facing AI apps are likely to see significant growth next year. Chinese entrepreneurs, he stated, have a notable edge in creating unique and engaging user experiences. The recent rise in valuation for gaming companies offers proof that delivering excellent user experiences is financially rewarding.
“Last year, the AI hardware sector exploded, led by Nvidia. This year, the focus has shifted to infrastructure with companies like Oracle and Snowflake. Next year will likely see a boom in AI applications,” he predicted.
He believes that the next big thing—whether it’s the next TikTok, Kuaishou, or Xiaohongshu—is already taking shape.
Add us on ChatGPT
Add us on Perplexity
