AI VC funding

Why do people go to college? Is it to get a good degree, in order to get a great job, in order to have an even better life? Is it to meet a soulmate, fall in love, and live happily ever after? Is it about education, intellectual curiosity? Who doesn’t want to seem smart in front of their friends? No, no, no. People go to college so they can join a fraternity–at least that’s the answer from the classic comedy Animal House. Few lines sum up the movie–and frat life–better than Kevin Spacey’s line during an Omega Theta Pi hazing ritual, “Thank you sir, may I have another”–details purposefully omitted. While the scenarios for startup venture capitalism are quite different from this scene in Animal House, entry into the Artificial Intelligence circle bears some similarities to fraternity hazing. Startups typically have to go through several rounds of funding (is hazing too strong a word?), and with the recent AI wave, the landscape is now more competitive. The reality is that many AI companies have to repeatedly go to venture capital firms to request more AI VC funding, maybe even with the words, “Thank you sir, may I have another?”

They Got a Bid

One AI company, Databricks, recently raised $140 million after a prior venture round that brought in $60 million. Databricks, which was started in 2013 and helps corporation process and manage big data, has made a clear attempt to “[make] sure it’s seen as an artificial intelligence software developer.” The company has put together a string of successes, servicing customers like Viacom, Shell, and HP, per the company’s website. Databricks provides a wide range of services within the big data sphere, helping customers retain clients, manage inventory, scale operational processes, and analyze data. At the heart of these capabilities is Databricks AI software, which runs a unified analytics platform, and the AI VC funding is betting on continued success.

Where Did This Come From?

Prior to this year, Databricks did not market itself as an AI company. The press release detailing Databricks’ successful capital fundraiser made twelve references to “artificial intelligence” and “AI”, compared with no mentions in December of 2016. After analyzing the business opportunities, co-founder and CEO of Databricks Ali Ghodsi decided that the best choice for the company was to jump into the deep end of the pool and get their feet wet in the AI industry. Ghodsi, commented, “We thought about it alot, and we decided it’s absolutely crucial timing, and it’s important for us to do this. There’s a huge demand for AI solutions.” The company has greatly benefited from the transition, growing their payroll to 220 employees and maintaining around 500 customer relationships as well as securing the most recent AI VC funding.

Yet the expansion is not without its challenges. In the highly crowded tech world, Databricks faces many competitors, including tech giants Amazon and Microsoft. With more recognizable brand names and much larger piles of cash, some wonder whether AI firms like Databricks can keep up, even with the AI VC funding they’ve received to date. Ghodsi is not worried, however, noting that the cloud services offered by Amazon and Microsoft require customers to provide leg work on the other side of the table. The fact that Databricks is a one-stop, hands-free service is undoubtedly a huge draw for the startup. If business and money keep finding their way to Databricks, soon their customers will be saying, “Thank you sir, may I have another?”

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