The Hive, a venture fund and co-creation studio, has closed on a $26.5 million fund.
The new capital marks The Hive’s third fund, this one focused on AI-powered applications in the enterprise. Specifically, the new money aims to help build early-stage companies “creating value and driving disruption” using AI in the enterprise and industry segments such as industrial, financial services, and healthcare, according to The Hive’s co-founder and managing director, T. M. Ravi.
Investors in the $26.5 million fund include Verizon Ventures, Software AG, GE, Rockwell Automation, March Capital Partners, and several individuals.
Based in Palo Alto, The Hive raised $8 million in its first fund and invested in six companies. It raised $21 million in its second fund and invested in 16 companies. It plans to invest in over seven companies out of this third fund over the next three years, said Ravi. The firm has already has co-created two startups, Decision Engines, and Live Objects, out of its third fund.
The Hive’s Model
The Hive itself provides initial seed capital of $1.5 million to $2 million in addition to follow-on capital. It also helps syndicate future rounds of financing with venture capitalists.
Since 2012, The Hive has co-created and invested in 24 companies, six of which have been acquired: Nurego, which was acquired by GE Digital; Kosei by Pinterest; Perspica by Cisco; Jobr by Monster Worldwide; Deep Forest Media by Rakuten, and E8 Security by VMware.
In addition to funding, The Hive works with entrepreneurs to help early startups with company building, business design, go-to-market strategy and introduction to early customers and partners. It partners with companies such as GE, Cisco, Verizon, Software AG, SAP, and eBay. It has a set of advisors that work with companies such as Facebook, Google, and Pinterest.
The Hive claims to be different from other VCs and incubators in that it uses a “high-touch” engagement model. It offers startups access to “a team of successful company-builders, serial entrepreneurs and venture capital investors who have created market-leading companies with several billion dollars in exits,” according to Ravi.
“The main difference is that we’re very involved in the very early stage, often before a company has even started,” Ravi told Crunchbase News.
In a statement, Sumant Mandal, managing director of March Capital Partners and co-founder of The Hive, said the firm offers “a new, unique approach to funding and building companies.”
Why AI?
The new capital may come at an auspicious timing: AI is a rapidly growing and perhaps maturing technology segment.
Frederic Hanika, head of M&A and corporate ventures at Software AG, said in a statement that the impact of AI can’t be overstated. “Businesses have a clear choice: Invest in AI and disrupt the competition or be disrupted by faster moving enterprises,” he said. “Through our involvement with The Hive, Software AG will ensure that its customers will be among the disrupters.”
Ravi agrees.
“We see AI driving significant transformation of the enterprise, where decision-making is largely going to be automated,” he told Crunchbase News. “Human beings will be primarily focused on policy-making and exception handling.”
Looking ahead, The Hive believes the impact of AI “is going to be orders of magnitude bigger than the Internet.”
“We think AI is going to change the world and our lives, and it’s going to do that in our lifetimes,” Ravi added.
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