Artificial Intelligence is a process of simulating human intelligence, which is achieved by developing algorithms integrated into a dynamic computing environment. AI is simply an attempt to make computers think like human beings with far greater processing power. A range of technologies come together to create artificial intelligence (AI), which allows machines to see, comprehend and behave similarly tohumans. In the fast paced world of technology and entrepreneurship, AI is defining a new era. AI startups are leading this revolution and bringing about major shifts in how companies innovate and run their operations. AI is incredibly important to the startup ecosystem because it presents previously unheard of chances for expansion, creativity and a change from conventional business methods. AI is changing conventional business tactics by encouraging entrepreneurs to make decisions based on data, provide individualized customer service and streamline operational procedure. But adapting AI is not so easy, it is challenging for startups to use AI models with limited finance and lack of trained personnel. This paper aims to address challenges and opportunities of AI with respect to startups.