Amid a wave of layoffs in the tech industry, it’s heartening to see some startups succeeding despite a dismal market outlook.
Kore.ai, a company that develops enterprise-focused conversational AI and GenAI products, today announced that it has raised $150 million in a funding round led by FTV Capital, Nvidia, Vistara Growth, Sweetwater PE, NextEquity, Nicola and Beedie. Bringing the company’s total raises to ~$223 million, the new cash will go toward product development and scaling Kore.ai’s workforce, co-founder and CEO Raj Koneru told me in an interview.
Koneru started Kore.ai in 2014 after spinning off Kony, a mobile app development startup, and several other small companies, such as iTouchPoint (an outsourcing company) and Intelligroup (a technology consultancy). He says he was inspired to found Kore.ai after seeing the potential of artificial intelligence, particularly large-scale linguistic models (LLMs) under OpenAI’s ChatGPT, to transform user experiences.
“With the introduction of GenAI and LLMs, the technology landscape turned out to be very chaotic and uncertain due to rapid developments,” Koneru said via email. “There were more questions than answers … but I saw conversational AI and the LLM as an opportunity for innovation.”
GenAI as a newer industry, Kore.ai did not develop GenAI products in 2014 per se. But Koneru says the company has been laying the groundwork for subsequent GenAI products — investing heavily in text generation and analysis models.
So how is it? Kore.ai innovator? Well, as Koneru describes it, the startup provides a code-free platform to help companies power various “business interactions” through AI — essentially any customer-to-employee or employee-to-employee interaction via phone or text (think support chats with IT/HR service desk). Kore.ai offers workflows and tools designed to give companies in industries such as banking, healthcare and retail the ability to build custom conversational AI applications or deploy pre-built, “domain-trained » chatbot.
“Kore.ai’s platform includes intelligent virtual agent, contact center AI, agent AI, and search and response capabilities for all kinds of customer experience and employee experience use cases,” Koneru said. “Additionally, Kore.ai’s suite of industry and cross-functional solutions address the needs of specific industries and business functions.”
But aren’t there many vendors building solutions that support GenAI and LLM for search, question answering, and other kinds of applications that Kore.ai supports? Indeed, there are.
Check out Acree, which hosts a platform for building enterprise GenAI applications, and Giga ML, which offers tools to help companies develop offline LLMs. Reka and Contextual AI recently emerged from stealth to help build custom AI models for organizations, while Fixie builds tools to make it easier for companies to code on top of LLMs.
What makes Kore.ai different, Koneru claims, is that it offers a lot of flexibility in terms of where companies can deploy their AI applications—in the cloud, on-premises, or in virtual machines—and the extent to which they can configure these applications. For some applications (e.g., text summarization, finding and generating answers, topic discovery, and sentiment analysis), Koneru argues that enhanced models — Kore.ai’s specialty — are superior to larger, more powerful models available from vendors like Anthropic and OpenAI, and more affordable.
There is also a privacy argument for smaller offline models.
A Predibase 2023 overview found that over 75% of enterprises do not intend to use commercial, cloud-hosted LLMs in production because they fear the models will compromise sensitive information. In separate voting by GenAI platform Portal26 and data research firm CensusWide, 85% of businesses said they were concerned about the privacy and security risks of GenAI.
Create a GenAI workflow or AI conversation using Kore.ai’s web tools.
“Over the past 18 months, we’ve noticed that enhanced models are very effective compared to pre-trained models for specific enterprise use cases,” Koneru said. “Compared to a large pre-trained model, less than 2% of enterprise data is required to train and create an optimized model that companies can safely deploy for enterprise use cases. We’ve successfully built smaller business LLMs that deliver higher throughput, better accuracy, controllability of responses, and — most importantly — reduce latency and cost.”
Also, unlike some competitors, Kore.ai offers ways for organizations to scale their AI as needed, Koneru says, and expand the use of AI into new and different areas.
“Kore.ai sits on top of the infrastructure and fragmentation of all LLM levels with a platform-based approach, offering freedom of choice with built-in guardrails for effective AI implementation,” Koneru added.
Now, the extent to which these capabilities really are differentiating subject to debate. Vendors such as Google Cloud, Azure, and AWS offer powerful scaling solutions for conversational AI and GenAI applications, and Kore.ai is not the only platform that allows customers to deploy models across a range of on-premises and cloud computing environments.
But — whether through the power of its platform, its nearly 1,000-person workforce, its marketing campaign, or all three — Orlando, Florida-based Kore.ai has built an impressive foothold in the competitive AI field. The company’s customer base eclipsed 400 brands (including PNC, AT&T, Cigna, Coca-Cola, Airbus and Roche) last year, and its annual recurring revenue now tops $100 million — thanks to licensing and usage fee revenue in addition to consulting Services.
It probably helps that funding for GenAI startups of all industries remains strong. According to recent overview by GlobalData, the London-based data analytics and consulting firm, GenAI startups will raise a record $10 billion in 2023 — a 110% increase compared to 2021.
The question is whether the growth is sustainable, given that GenAI isn’t homegrown in the business — at least not yet. Koneru argues that it is, pointing to investigations such as Gartner’s from last October, which found that 55% of organizations are already piloting or deploying GenAI technology in production for functions such as customer service, marketing and sales.
“We haven’t seen a slowdown in the market,” Koneru said. “The most pressing challenge [we’re facing] it’s operating and innovating in a market that’s not just seeing rapid growth, but disruption driven by advances in technology, changing user expectations, and the broader integration of newer AI capabilities that are evolving every day. Enterprise players must take advantage of the technology’s advantages while avoiding security, privacy and compliance pitfalls.”
Added FTV Capital’s Kapil Venkatachalam in a statement: “While the advanced AI market has seen rapid growth in recent years, many businesses are struggling with how to responsibly and effectively deploy AI in their organizations. We were impressed with Kore.ai’s open platform approach to leveraging AI models, scalability, vertical specific out-of-the-box applications and low-code capabilities, making them well-positioned to take advantage of the growing demand from global brands looking for innovative AI solutions to enhance business interactions and drive value.”
