Why OpenAI, Anthropic and Google are funding startups with AI credits

AI firms are spending millions on free credits as they compete to become the preferred platform for the next generation of startups

OpenAI, Anthropic and Google are giving away free AI computing credits worth hundreds of thousands, and in some cases millions, of dollars to startups across the globe, a report by the Wall Street Journal said. The offers reportedly include access to AI models, application programming interfaces (APIs), cloud infrastructure and engineering support that startups would otherwise have to pay for.

 

According to the report, some startups backed by Y Combinator have received credit packages worth up to $3 million from multiple providers, an amount comparable to a seed funding round.

 

It also said some founders have been able to negotiate better offers by playing AI companies against one another, while others have delayed fundraising because the credits reduced their operating costs.

 

According to the report, competition has intensified in recent months after OpenAI revised its startup programme to offer $500,000 in free credits without requiring equity, while startups can opt to receive an additional $1.5 million in credits in exchange for equity. Anthropic, meanwhile, increased its offer for Y Combinator startups from $30,000 to $500,000.

A new version of the cloud-credit playbook

The strategy resembles the cloud-computing race of the past decade, when Amazon Web Services (AWS), Microsoft Azure and Google Cloud competed for startups by offering free cloud credits, the report said.

 

This time, however, the competition centres on AI inference, API usage and access to foundation models.

 

Rather than relying only on model performance, AI companies are trying to persuade startups to build products on their platforms from the outset. The expectation is that companies using their models today could become long-term enterprise customers as they grow, it said.

Lower costs today, paying customers tomorrow

For startups, the credits can majorly reduce operating costs. Building AI applications requires continuous spending on model access and computing power. Free credits allow founders to lower infrastructure expenses, preserve cash and redirect funds toward hiring and product development.

 

In some cases, the support can also extend a startup's financial runway by reducing monthly spending.

 

The Wall Street Journal report said that for AI companies, the credits also represent a customer acquisition strategy. Simply put, instead of prioritising immediate revenue, providers are absorbing upfront costs in the hope that startups will continue using their platforms after the credits expire.

 

Another advantage lies in platform stickiness. Once startups integrate a provider's APIs and workflows into their products, switching to another platform may require changes to applications, testing and internal systems, making early adoption valuable, the report said.

As providers spend more, users look to spend less

The competition comes as businesses become increasingly conscious of AI-related expenses. According to a report, Tesla has introduced a weekly spending cap of $200 per employee on third-party AI tools, with any higher expenditure requiring managerial approval.

 

The policy took effect on July 6 after software engineers were reportedly consuming thousands of dollars' worth of AI tokens each week.

 

The contrasting strategies show that while AI companies are subsidising AI usage to attract startups and developers, businesses deploying these tools at scale are looking for ways to keep computing costs under control.

 

The development also suggests that as AI adoption gathers pace, companies are also racing to get startups to build on their platforms, hoping they will remain customers as they grow.