Privacy Policy for AI Startups and Companies
Written by: Natasha Piirainen | Updated on: February 6, 2026
Reviewed by: Ali Talip Pınarbaşı, CIPP/E, & LLM
AI startups and companies typically collect personal information from website visitors and customers in order to train and develop AI models, deliver services, and improve the overall user experience.
AI requires massive datasets to function properly, and often this data is regulated under data privacy laws that require your AI startup or company’s privacy policy to make certain disclosures to individuals about the use of their personal data.
Under the applicable privacy laws, this document must explain how your AI business collects, uses, stores, and shares personal information.
Keep reading to learn all about making a privacy policy for an AI startup, what it should include, and how to ensure it aligns with applicable laws and regulations.
How To Create a Privacy Policy for AI Startups and Companies?
There are several ways you can reliably make a privacy policy for your AI startup.
Use a Privacy Policy Generator
One of the easiest ways to make a privacy policy for your AI startup or company is to use Termly’s free Privacy Policy Generator.
There’s a reason why over 6,000 AI businesses trust using Termly to help make a privacy policy and manage user consent.
Use a Privacy Policy Template
You can also use a privacy policy template to make this legal document for your AI business.
Write It Yourself
Finally, you can also write your own privacy policy for your AI startup or company, just ensure you have adequate legal and technical knowledge to do so accurately.
How NOT To Make a Privacy Policy for AI Startups
Now that you know how to make a privacy policy, here are a few things to avoid:
- Don’t rely on an AI or LLMs: You understand the complexities and nuances of AI, so it shouldn’t surprise you to learn that AI cannot make you an accurate privacy policy unless you heavily edit the final document to the unique circumstances of your data processing activities.
- Don’t pay for ‘generators’ that are comparable to free templates: If a privacy policy generator tries to charge a fee for something that other companies give away for free, it’s best to avoid it.
- Don’t be dishonest or leave anything out: Make sure your final policy is very thorough, accurate, and meets the requirements of all laws that impact your business and consumers.
Do AI Startups and Companies Need a Privacy Policy?
Yes, under all major data privacy laws like the GDPR and the CCPA, most AI startups and companies need to publish a compliant, honest privacy policy.
Having a compliant privacy policy helps you meet transparency guidelines and overall reduce your legal risks.
What Laws Impact AI Startup Privacy Policies?
Most major privacy laws require businesses to publish a privacy policy when they collect personal information, and this applies to AI startups and companies.
Do AI Companies Use Data to Train Models?
Yes, AI companies typically use personal data to train or improve models, and this must be clearly disclosed to consumers directly in your privacy policy.
What Information Should Be Included in an AI Startup Privacy Policy?
Your AI company’s privacy policy should clearly outline how you handle personal data throughout the entire lifecycle of the data, from the initial data collection to deletion of the personal data.
What Data You Collect
Your AI company should list all personal data collected directly and indirectly from users through system interactions.
Why You Collect the Data
Your AI company’s privacy policy should explain why you’re collecting personal data from consumers.
How You Collect the Data
Under laws like the GDPR and the LGDPA, entities must explain how you collect personal data from protected consumers.
Third Party Data Sharing
Your privacy policy should identify the types of third parties you share data with and explain why it’s shared.
Consumer Rights Over Their Data
Your users might have the following rights over their data, depending on which laws apply:
- Access their data
- Request to correct their data
- Request to delete their data
- Opt out of certain data processing
- Right to data portability
- Restrict certain data processing
- Withdraw consent for data processing
Children’s Data Clause
If you collect and use children’ personal data, your privacy policy should include a section explaining how you handle this data.
Data Retention Clause
Privacy laws limit how long companies can retain data, and your privacy policy should explain this process clearly to consumers.
Cookies and Other Trackers
You should have a section in your privacy policy explaining if and how your website uses cookies and similar trackers.
Data Security Clause
Under data privacy laws like the CCPA and the GDPR, you’re responsible for protecting the personal data you collect.
Updates to Your Privacy Policy
Explain in a clause in your privacy policy how you communicate to users when any material changes were made.
Company Contact Information
Include a working email address, mailing address, or phone number somewhere in your policy that’s easy for consumers to find.
Where Should I Display My AI Startup Privacy Policy?
AI startups should post their privacy policy in multiple places where consumers can easily find it, including:
- Website footer,
- Account sign up or registration pages,
- Payment screens,
- Below prompt inputs,
- In mobile apps, when applicable,
- Within product dashboards,
- Within SaaS onboarding flows,
- Wherever data collection occurs.
How Does Termly Help AI Startups with Privacy Policies?
For AI companies, making a privacy policy can feel like an overwhelming or confusing task, especially with the complex privacy laws and AI regulations still forming around the globe.
Using resources like Termly’s Privacy Policy Generator can help AI startups and companies more easily, efficiently make a custom policy in line with applicable laws.