Microsoft Acquires Semantic Machines, Continuing AI's Big 2018

Morning Report: Microsoft acquired a “conversational AI” company yesterday. Here’s what we know.

On Sunday, Microsoft announced that it acquired Semantic Machines, a company focused on using artificial intelligence (AI) to power human-computer interactions.

The upstart company’s website claims that through “[c]onversational AI interfaces” individuals will be able to “communicate naturally with computers for the first time,” and that it is “developing the fundamental AI technology needed to make conversational computing a reality.”

This makes the startup purchase by Microsoft quite interesting.

Semantic Machines raised just under $21 million during its life, accreting capital from General Catalyst and Bain Capital Ventures while a private company. Notably, however, the firm had not raised since its $12.4 million Series B in December of 2015. In venture time, 2015 is eons ago. Startups tend to raise and ~~spend~~ deploy capital under a much quicker timeline, as their goal is growth and capital deployment is the rocket of choice.

We don’t have notes this morning as to whether Semantic Machines tried and failed to raise more funds before deciding to sell, but certainly to see a company not raise for that amount of time and then find a new home is not rare. And, Microsoft is likely more than happy to welcome the firm to its shores as it keeps working on its digital assistant Cortana, which competes with Amazon’s Alexa, Alphabet’s Google Assistant, and Apple’s Siri, the latter of which doesn’t work.

There is notable venture interest in the AI sector in 2018. Just last week, Crunchbase News covered two new funding rounds into AI-focused startups: Beautiful.AI’s $11 million Series B and Alloy.AI’s $12 million Series A. Seeing exit potential the Big Five likely won’t temper VC enthusiasm.

(We have more on the top-funded global AI startups here in case you want even more on the sector.)