One Class of AI Startups That Can Thrive Without Funding: Porn Chatbots

Sex sells, and sex created by artificial intelligence is no exception.

While many generative AI startups have struggled to manage the exploding costs of AI and retain their customers, AI-powered romantic chatbots haven’t had much trouble attracting and keeping their users. Since OpenAI released ChatGPT in late 2022, a thriving ecosystem has emerged, ranging from relatively tame AI “companions” to pornographic chatbots accompanied with explicit pictures. Many of these companies have entire subreddits with tens of thousands of users dedicated to them. (Even OpenAI’s own chatbot store is flooded with AI “girlfriends” that are technically banned under their usage policies.)

However, despite their popularity, these startups haven’t been able to benefit from the broader AI funding frenzy due to agreements with limited partners that prevent most VCs from investing in controversial sectors like porn, gambling and alcohol.

That might not be much of a hindrance, though. Many of these sites don’t need to raise money: they can generate plenty on their own. They often have paid tiers that offer users higher-quality models, faster service, or the ability to create their own characters. That, combined with relatively cheap underlying AI models and bare-bones websites, means that these chatbots are likely to become cash cows, VCs tell me.