Venture

Artificial Intelligence Continues Its Fundraising Tear In 2018

Funding in the AI sector has climbed steadily—and impressively—over the past decade. In 2017, investors pumped nearly $5 billion in U.S.-based AI startups. And trends point to 2018 being another great year for venture investing in AI and machine learning startups.

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In late May, Chinese facial recognition technology developer SenseTime Group announced it had raised $620 million in a second round of funding. The raise valued the company over $4.5 billion, making it the world’s most valuable AI unicorn. SenseTime reportedly became profitable last year.

Meanwhile, UiPath—an enterprise robotic process automation (RPA) software company—brought in $153 million in a massive Series B round led by previous investor Accel. UiPath said the round pushed it into unicorn status and followed a record year of growth. Specifically, the startup said its enterprise customer base surged to more than 700 in 2017 from less than 100 customers at the beginning of the year. UiPath helps those businesses automate mundane tasks in back-office IT systems to free up employees’ time to focus on work that AI systems and software cannot do.

“We’re putting our money where our mouth is,” Accel partner Rich Wong told TechCrunch in an interview at the time. “We wouldn’t have led the Series B after leading the Series A if it wasn’t for that momentum.”

Just last month, Pony.ai—a startup whose autonomous driving platform powers the first fully self-driving fleet in China—raised $102 million in a Series B round that almost put it into unicorn category. China’s ClearVue Partners and Eight Roads (which is part of Fidelity International) co-led the round, which closed just seven months after Pony.ai raised a $112 million Series A.

But while these are some of the most prominent rounds, a number of other AI startups have raised significant sums.

Drishti

Prasad Akella, CEO

Drishti means “vision” in Sanskrit. This Palo Alto-based startup is using AI to digitize human actions on the assembly line. There is a slew of startups focused on predictive maintenance by monitoring equipment. Drishti claims to be different in that it automatically digitizes human actions inside the factory to create “a massive new dataset.”

“Billions of dollars have gone into IoT, especially industrial IoT, keeping track of machines on the floor,” noted Prasad Akella, founder and CEO of Drishti. “But our computer vision observes the assembly process to give plant managers a complete view of what is going on while simultaneously guiding the worker along as he/she makes decisions. We’re the only company that looks at the process. We believe it’s far more important than the product.”

In May, two-year-old Drishti raised a $10 million Series A in a round led by Emergence Capital that included participation from existing investors Andreessen Horowitz and Benhamou Global Ventures. It won’t reveal revenue figures or customer names, saying only they are “industry giants” in the automotive and electronics industries with tens of billions of dollars in revenue.

“We’re attacking a huge $12 trillion manufacturing market,” he said. “The goal is to have man and machine working together.”

The CEO is no stranger to the world of AI. In the 1990s, he led the team at General Motors that created the world’s first collaborative robots.

“The goal is to have man and machine working together.” Click To Tweet

Akella believes Drishti’s offering will augment human jobs rather than replace them. He maintains there are still certain things human beings can do that would take machines decades to learn.

“We give employees a third eye and second brain that is running alongside with the operator so that both the manufacturing process and product quality can be improved and their jobs can be more secure,” Akella told Crunchbase News.

Alloy

San Francisco-based Alloy.ai has developed a digital supply chain platform that aggregates and analyzes information from all sources in the supply chain and aims to uncover additional revenue opportunities for companies. In May, it raised $12 million in a Series A round led by Menlo Ventures with participation by 8VC.

“Technology has driven rising consumer expectations, and keeping up with supply and demand can be overwhelming for companies,” said Joel Beal, CEO and co-founder of Alloy. The company has more than 20 customers, ranging from Fortune 100 enterprises to startups.

“Consumer goods companies are facing the most competitive environment in history, and the importance of getting the right product to the right customer at the right time is unprecedented,” said Matt Murphy, a partner at Menlo Ventures, at the time of the company’s latest raise. “Alloy’s modern digital platform provides a competitive advantage to these companies by helping them both understand customer demand and react quickly.”

Beal says Alloys platform is industry agnostic, and—like Drishti claims—augments what people are doing rather than replace their jobs.

“We’re helping consumer goods companies align their supply chains with consumer demand. That sounds very straightforward, but it’s hard to do in practice,” Beal told Crunchbase News. “Using AI and machine learning to figure out pattern matching and sift through a huge amount of data allows companies to better forecast trends, and flag implications of what’s happening such as, ‘Do I have sufficient inventory? How much money would it cost me if we run out? Do we have too much inventory? What can I do about it?’”

The company is proliferating. It now has 22 employees, up from 12 in March, and Beal predicted it will employ 30 by year’s end. Beal declined to reveal revenue figures; however, he said Alloy’s annual recurring revenue metric has tripled in the past year.

Avaamo

In May, AI startup Avaamo raised a $14.2 million Series A round led by Intel Capital that also included participation from Ericsson Ventures, Mahindra Partners, Wipro Ventures, and WI Harper. The deep learning company builds an artificial intelligence-based chat service for enterprise use.

Avaamo’s intelligent chat assistants are being deployed in nearly 40 countries by companies in finance, healthcare, telecom, and retail. Its focus is on supply chain, HR, sales support, claims processing, and insurance advisory.

Avaamo says it has developed a more sophisticated interface to better handle customer questions in those industries, according to this VentureBeat article. Its latest funding will mainly go toward expanding sales and marketing.

SparkCognition

In February, Austin-based artificial intelligence company SparkCognition announced the full close of its multi-part Series B. The firm raised a total of $56.5 million in the round, which was announced during both 2017 and the early months of 2018.

Founded by Amir Husain in 2014, SparkCognition aims to provide businesses with cybersecurity and machine learning technology.

In March, I interviewed Husain—a prolific inventor with 22 awarded and over 40 pending U.S. patent applications to his credit—on how AI was likely the harbinger of both innovation and destruction.

In July, SparkCognition and Boeing announced they would use artificial intelligence and blockchain technologies to track uncrewed air vehicles in flight and allocate traffic corridors and routes “to ensure safe, secure transportation.”

This quartet represents just a small sample of the many AI-related startups that have raised early-stage money in the past few months. Whether one of them, or any others, will go on to also raise mega-rounds is unknown. But it will be fun to watch.

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