Despite all the hype around generative AI—including some giant, headline-grabbing funding rounds announced recently—there’s still an ongoing debate in the market about whether smaller startups trying to build real businesses around AI are actually finding product-market fit. How many are actually finding paying, business customers for new tools and products solving real enterprise problems?
As investors with a long-term, bullish outlook on generative AI, we’re excited to back early-stage companies which are scaling and innovating, often outside the limelight, as market urgency grows and companies continue to move from AI experimentation into production. Indeed, our recent “State of Enterprise Tech Spending” report, which surveyed 100 enterprise CXOs about their tech-spending plans, identified an increasing number of generative AI deployments within enterprises, but found the majority of new applications hadn’t yet been put to use.
That makes the enterprise traction of early-stage companies in our portfolio—including two which announced new, Series B funding rounds this week—even more impressive, in our view.
Take Galileo*, which this week announced it has raised $45 million in new funding. When we first spoke with Galileo more than two years ago, the company had an early product geared towards developers building applications with language models (circa May 2022!). But we fell in love with the bold vision of solving the quality-measurement problem for AI with unstructured data, and the talented technical founders who previously led AI teams at Google and Uber.
Today, Galileo helps its fast-moving, enterprise customer base, including customers like Twilio, Chegg, HP, Procter & Gamble and other Fortune 50 enterprises move from experimentation to production with gen AI products. The company’s “evaluation intelligence” platform helps customers monitor, debug and evaluate increasingly complex generative AI systems at scale.
As we do with many of our early-stage investments, we helped Galileo get its first products out the door and also assisted the company with customer introductions, marketing and making key hires. This is an early-stage playbook we continue to execute as we search for standout generative-AI companies that are just getting started, often by former executives and developers from big-tech players. We continue to believe in the power of innovation at the infrastructure and application layers, where we think there’s a huge opportunity for value creation
Along those lines, three years ago, we helped lead the seed round for Neuron7*, a generative AI startup that that was little more than a concept at the time. Niken Patel, the CEO, had what we considered a bold and innovative thesis: Customer service in industries with complex, high-stakes products—like medical devices, industrial equipment and telecommunications—often faces significant bottlenecks. This is because the necessary knowledge to resolve customer issues is often scattered across disparate sources, such as lengthy product manuals, troubleshooting databases and the minds of expert technicians. Neuron7 aimed to solve this by leveraging large language models (LLMs) and cutting-edge generative AI to create a single system of intelligence. This approach consolidated vast, fragmented knowledge across thousands of interactions, people and data points, offering, in our view, a new level of insight and speed to resolve customer queries.
To help accelerate Neuron7’s journey, we augmented the expertise of the company’s product team with Bill Binch, a Battery operating partner with over three decades of enterprise sales experience. Within just 12 months, Neuron7 made impressive strides, securing top tier customers, including publicly listed companies that are high-profile players in sectors like healthcare and high-tech, where customer service is mission critical.
Some customers also have since expanded their usage of Neuron7 products, purchasing additional product modules to improve the efficiency and effectiveness of their support teams. Recognizing the company’s momentum, we doubled down on our investment, leading a $10M Series A round within a year of our seed investment. Today, Neuron7 continues to grow its presence across service-desk, call-center, and field-service operations and boasts an expanding global footprint. Most notably, Neuron7’s success caught the attention of ServiceNow, which through its ServiceNow Ventures arm made a strategic investment in the company this past March, further validating the company’s transformative potential.
And today, Neuron7 announced a $44 million Series B fundraising round led by Keith Block, the former Salesforce co-CEO, now at Smith Point Capital.
Another early-stage AI company we’re excited about is Orkes*, a microservice orchestration engine whose founders previously worked at Netflix, for developers to create durable workflows across distributed systems. We seed-funded the company and then doubled down to participate in the company’s $20 million Series A fundraising round earlier this year alongside Nexus Venture Partners and Vertex Ventures. This round, in our view, is a testament to Orkes’ significant growth and the continued importance of the Conductor open-source community, upon which Orkes’ technology is based. Orkes has become an important part of the critical application infrastructure underpinning digital companies in many industries.
As AI applications and services mature and more enterprises adopt them, we’re excited to keep backing the next generation of AI startups leading this charge. These companies span sectors from databases to software development to customer service to government contracting and more. We’d love to talk to you if you’re building in this area.
The information contained here is based solely on the opinions of Dharmesh Thakker, Jason Mendel, Sudhee Chilappagari and Bill Binch, and nothing should be construed as investment advice. This material is provided for informational purposes, and it is not, and may not be relied on in any manner as, legal, tax or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in any fund or investment vehicle managed by Battery Ventures or any other Battery entity.
This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and is for educational purposes. The anecdotal examples throughout are intended for an audience of entrepreneurs in their attempt to build their businesses and not recommendations or endorsements of any particular business.
*Denotes a Battery portfolio company. For a full list of all Battery investments, please click here.
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