At AI bot startups, cool kids rule
You would think at least one AI-powered humanoid bot would have a properly nerdy name. Maybe a Poindexter or Hildegarde to add some natural language processing to your customer chat app?
No such luck. Instead, it sounds like the cool kids are in charge at most digital assistant and bot startups. Think short, peppy names that top the popular baby name lists. There’s Aiden and Riley putting AI to work for marketers. Mya can chip in with recruiting. And Ava helps the hearing impaired. You get the idea.
Those are some of the more than 20 recently funded startups in the Crunchbase dataset with a human-sounding name that are developing some sort of digital assistant or AI bot. They’re working on tools for across a range of consumer and enterprise tasks, from lead generation and customer service to tracking personal finances.
So far, the popular kids haven’t raised much venture capital. At least three-quarters of the companies on the list are seed stage, and ones that are still private have collectively raised about $35 million in disclosed funding in the past year. Of course, there are other startups developing bot technologies that don’t have human names (see partial list here), and that boosts the venture funding total to at least $62 million.
Still, those are pretty small numbers for the VC industry. It’s less than 5 percent, for example, of the total that VCs put into food delivery startups in the past year.
But there’s reason the friendly bot and digital assistants space is worth watching. For one, seed investors with some of the best track records in the tech industry are active in the space. Y Combinator, which helped bring us Airbnb Airbnb, Dropbox and Stripe, has made multiple investments in AI-enabled bot and digital assistant startups in the past couple years, including Claire for retailers, Penny for personal finance, Ross for lawyering, Luka for activity planning, and the aforementioned Riley. SV Angel, one of Silicon Valley’s oldest and best-known seed firms, has backed Ava and Polly, a bot for adding surveys to enterprise messaging platforms.
Big-name VCs who do most of their investing post-seed are also taking part in some of these rounds. Kleiner Perkins invested in Riley, while Greylock Partners led a $13 million first-time round for Ozlo, a developer of conversational AI technology. General Catalyst, meanwhile, co-led a $3 million seed round for Butter.ai, which bills itself as a personal assistant for tapping company knowledge.
Probably the most active corporate investor in the space is Slack, the popular team messaging platform that launched an app investment fund eighteen months ago. So far, Slack has backed at least four companies on our lists, including a co-investment with General Catalyst in Butter.ai.
In addition to attracting savvy investors, digital assistant and AI bot startups also hold appeal for acquirers. The sector has already delivered one nice exit with Samsung’s acquisition last year of Viv, the AI digital assistant startup founded by the creator of Apple’s Siri. Samsung reportedly paid $215 million for Silicon Valley-based Viv, which had previously raised $30 million.
It doesn’t hurt that the most valuable and acquisitive technology companies have sizeable internal efforts around chatbots and virtual assistant technologies. The list includes Facebook, Amazon, Google, Tencent and Apple, among others. Considering the comparatively small sums invested in AI chatbot and digital assistant startups to date, just a few mid-sized acquisitions by these companies would be enough to deliver enormous returns.
Moreover, the humanoid AI space could use some new characters. For now, most people just know Alexa and Siri. It’ll be interesting to watch the new kids mature and to see whether any of them will grow up to become household names.
Featured Image: Li-Anne Dias