Editor’s note: This article is part of an ongoing series in which Crunchbase News interviews active investors in artificial intelligence. Previous interviews and highlights with Felicis, Battery Ventures, General Catalyst, Bessemer Venture Partners, Accel, Insight Partners, Index Ventures, Sequoia Capital, Section 32, M12, Sapphire Ventures, Bain Capital Ventures, Menlo Ventures, Costanoa Ventures Please read. The story of 2023.
For the final installment of our 2024 AI Investor series, we spoke with Citi Ventures, one of the most active corporate venture investors of the past decade, about their focus on investing in AI.
“In my 20 years in corporate investing, I’ve never seen anything as disruptive as this,” said Matt Carbonara, managing director of Citi Ventures, the venture investment arm of banking giant Citigroup. he said.
When it comes to AI, there’s more customer motivation than with any new technology, and many Fortune 2000 companies are exploring use cases, he said.
Smart entrepreneurs naturally look for opportunities to innovate and disrupt, and investors look for companies that achieve great results. All three components are consistent, he said.
Commenting on the competition among investors in the AI sector, Carbonara said, “We had to move fast, hurry, and work hard to get in front of these companies and build relationships before raising capital. ” he said. “It was a very active area.”
The firm invests in companies that have the potential to help Citigroup transform its business.
AI is a horizontal technology, he said. “Coding, compliance and regulation, data quality, employee productivity, knowledge management, these are areas we’ve been thinking seriously about,” Carbonara said.
Citi’s wealth management business could also benefit from automation.
Carbonara said Citigroup has 40,000 developers, nearly a quarter of its workforce. “For a group this large, even a 10% increase in productivity would be meaningful to Citi,” he said.
Previous AI companies that Citi Ventures has invested in include knowledge management company Glean. Writer provides content generation for companies organized by industry. Compliance startup Norm Ai. Poolside, a startup that increases developer productivity. Galileo is used to monitor, debug, and improve the accuracy of AI models.
Two Citi portfolio companies were also acquired this year. Lexion, which uses AI for contract workflows, was acquired by Docusign for $165 million in cash, and Datavolo, which captures data from PDFs and other documents and stores it in a vector database, was acquired by Snowflake for an undisclosed amount.
active legal entity
Citi Ventures rounds out the top 10 largest corporate venture firms investing in AI-related companies, according to Crunchbase data. Our team of 18 is spread across the Bay Area, New York, London, Singapore, and Israel. The company has approximately 120 active portfolio companies.
Based on analysis of Crunchbase data, other active corporate ventures investing in AI include Google Ventures, Samsung NEXT, Salesforce Ventures 1, NVentures (part of Nvidia), Databricks Ventures, and M12 (Microsoft Ventures). Fund), Intel Capital, Bloomberg Beta and OpenAI Startup Fund.
Additionally, Microsoft, Amazon, and Alphabet have invested billions of dollars directly into underlying model companies, with OpenAI and Anthropic raising the most funding from these investors.
Introduction of AI
Most of Citi Ventures’ portfolio companies have some degree of AI integration, Carbonara said. While some companies are adding generative AI to a meaningful extent, most of the interest is in the native AI category, where application companies are starting to see real revenue, he said.
Venture investor Sapphire Ventures recently published a post estimating that over 47 native AI application companies have generated more than $25 million in revenue.
Adoption of applied AI is starting to take off, and Carbonara agreed: Companies are still learning. It’s a new skill set. How do you roll it out? How do you get the precision you want? It’s an iterative process, as opposed to someone coming to you with a pre-baked pie. ”
Within Citi’s portfolio, Carbonara tracks companies that are making meaningful hires.
“We see this with Glean. We see this with Writer. Some of the fastest growing companies are application companies, where you can say, ‘This is a real business that’s going to be a big business.’ It’s generating huge profits. ”
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Illustration: Dom Guzman
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