AI-DRIVEN STARTUPS IN VENTURE ECOSYSTEM: POTENTIAL, ETHICS, AND GLOBAL REGULATORY CHALLENGES

Abstract

The rapid advancement of artificial intelligence (AI) technologies has spurred a new wave of startups that are driving disruption across various sectors. However, the growth of AI-driven startups is not always accompanied by adequate ethical frameworks or regulatory preparedness—especially within the global venture capital ecosystem. This study aims to comprehensively examine the dynamics of AI startup growth in the global investment landscape, assess the implementation of ethical principles in AI development, and investigate the readiness and challenges of cross-border regulatory systems. This research employs a mixed-methods approach with a multi-regional case study design. Data were collected through document analysis, online surveys, and in-depth interviews with startup founders, investors, and regulators from North America, Europe, and Asia. Data analysis combined descriptive statistics and qualitative thematic analysis. Findings indicate a significant global increase in investment toward AI startups. However, only a minority of startups have implemented algorithmic audits, model transparency, and regulatory compliance practices. Divergent policies—such as the EU AI Act in Europe and sector-based frameworks in the U.S.—present ongoing challenges for global regulatory harmonization. This study proposes the AIRE (AI Investment Risk Evaluation) framework as a practical tool for investors to assess ethical and regulatory risks in AI startups. This research contributes a multidisciplinary perspective integrating technology, investment, and ethics to guide the responsible development of AI startups globally.