Summer Updates
Exciting portfolio additions and news, media attention for our “AI Plateau” conviction, and an eco-friendly morning commute
As the last weeks of summer come into view, we’re pleased to share an update on two exciting additions to the Emergence family and a new development for one of our portfolio companies. We’re also pleased to share that our thesis about the “AI Plateau” was adapted by a leading business publication. Read on for more:
Arcee.ai
Arcee.ai is a cost-effective, secure, end-to-end platform to build and deploy Small Language Models (SLMs), and we are thrilled to support their startup journey. As we wrote in our post announcing the news:
Businesses are facing a painful dilemma: In order to get the most out of generative AI, they must unlock their proprietary data for model training. However, for very good reason, many enterprises neither can nor will allow this data to be exposed to third parties, such as the dominant LLM providers. Further, most companies don’t have the resources or expertise to train and maintain their own LLMs, let alone deploy applications on top of them.
Arcee.ai is solving this problem using two pioneering model merge techniques the company has developed and deployed. (Indeed, Arcee.ai actually hired the creator of the leading open source model merging library, Charles Goddard, formerly of NASA and Apple, who is now Chief of Frontier Research.)
The results Arcee.ai’s customers have seen so far speak for themselves:
One financial services customer saw a 23% boost in benchmarks and a 96% reduction in costs. Another insurance customer boosted performance by 83% and cut costs by 89%. These are incredible results for a company still at the beginning of its journey, and much of that has to do with how special and well equipped for this task the Arcee.ai founders are.
Speaking of the founding team, CEO Mark McQuade and CRO Brian Benedict were both early commercial hires at Hugging Face and have brought with them a deep understanding of the state of AI research and the importance of developing solutions that are production-ready for the enterprise. Their third Co-Founder, CTO Jacob Solawetz, comes from YC company Roboflow (where he also worked with Mark), which has been working on computer vision problems, a subset of AI that also requires custom models for maximum performance.
We truly believe that Arcee.ai is going small (language models) to win big in the long run, and couldn’t be happier to be on the journey with Mark, Brian, Jacob, and the whole team.
For more on Arcee.ai, check out VentureBeat’s coverage.
Adaptive
No less exciting is our partnership with Adaptive, which is solving a problem that impacts, directly or indirectly, the tens of millions of Americans who work in construction or real estate, or own property. Payments in construction are slow, taking two to three months on average to reach the biller, and the cost of these delayed payments alone was $273 billion for 2023. That figure increased the overall costs of construction projects by 14 percent.
Adaptive’s cofounders, Matthew Calvano, along with Henry Bradlow and Francisco Enriquez, thought that the cause of these delays lay in back-office inefficiencies. They set out to build a solution that would simplify payments and accounting, driving efficiency in the industry, and keeping contractors, vendors, employees, and ultimately customers, happy.
TechCrunch covered Adaptive’s announcement, writing:
Adaptive, which this week closed a $19 million Series A round led by Emergence Capital, delivers an array of workflow automations for financial management, including budgeting, expense tracking, accounts payable and electronic payments. Using Adaptive’s product, customers can upload documents like insurance agreements and payment requests in formats such as SMS and PDF and leverage automations to take action on these uploads, like approving requests and budgets.
Adaptive is part of our Industry Cloud conviction area, and we’re excited to help the company grow its platform to seize upon this underdeveloped market opportunity.
Augmedix
A word of congratulations to Augmedix, which, after going public in 2020, is being acquired by Commure, creating the largest artificial intelligence software provider in healthcare. Read the announcement from Commure here.
Our “AI Plateau” Conviction Gains Ground
In June we sent you our latest article about the AI Plateau affecting performance, and what opportunities that reality presents to startups and founders.
Fast Company published an adapted version of our article, “The first wave of AI innovation is over. Here’s what comes next,” and shared our four big opportunity areas:
Engage Experts
Leverage Latent Data
Capture in Context
Secure the Secret Sauce
Check out the piece, and let us know what you think.
A True Bay Area Commute
If you’re sick of fighting morning traffic or jamming into crowded train cars, consider how Emergence Capital’s Gordon Ritter, Wendy Lu, Bruno Snow, and Shun Hagiwara came to work a few weeks ago:
The foursome successfully completed a 2.5 mile open water swim from San Francisco’s Aquatic Cove to our home at Pier 5 on the Embarcadero. Don’t worry — we had breakfast tacos waiting for them. Congratulations to our watery colleagues, celebrating here after climbing the ladder out of San Francisco Bay:
Thank You
Thanks for reading. We hope you are able to enjoy a restorative rest of your summer with family, friends, and loved ones. We’ll be back soon with more updates.
– Emergence Capital