Dean DeBiase is a best-selling author and Forbes Contributor reporting on how global leaders and CEOs are rebooting everything from growth, innovation, and technology to talent, culture, competitiveness, and governance across industries and societies.
Kore.ai Nabs $150 Million From NVIDIA And FTV To Scale Enterprise AI
By Dean DeBiase
January 30th, 2024
For years I have been speaking on, writing about, advising, and running AI-related ventures. But with Generative AI (GAI) at the peak of the Gartner Hype Cycle, we still find ourselves in the too much talk and not enough impact phase. This “all hat, no cattle” dilemma reminds me of the famed Wendy’s “Where’s The Beef” ad campaign.
Sure, there are some wins on the board since the AI sector got a turbo boost with the introduction of ChatGPT at the end of 2022. This innovation continues to drive endless hype, competition, and investment into the AI sector, specifically for Large Language Models (LLMs) and GAI. But beyond the novelty cocktail party chatter, that will come and go like most hyped cycles, I’ve been looking for phase two AI organizations that can transform companies, industries, countries and even societies. One way to spot those, or find the beef, is to follow the smart money.
Kore.ai’s $150M investment from FTV Capital, NVIDIA (NVDA) and others is far from the largest round we’ve seen, and Kore.ai may not be a familiar name for some of you. But I think the round is significant for the sector and provides leaders lessons/insights about how to get to this level and what’s next.
Rebooting AI Simplicity
At a basic level, Kore provides a no-code platform to help companies power business interactions with AI to impact two of the most important categories that they care about: revenue growth and cost efficiencies. Their first growth phase has mostly been fueled by enterprise sales, with two million users automating 450 million employee and consumer interactions a day through AI virtual assistants.
The progress and momentum in this sector are heading up and to the right. According to Howard Friedman, co-author of a new book released today, Winning with Data Science: A Handbook for Business Leaders, “Capabilities are rapidly expanding with substantial improvements in the quality of the responses and ease of implementation in only the past year alone. Companies are applying Generative AI along with sentiment analysis to prioritize customer inquiries based on criteria including urgency of request. These types of applications will continue to grow in the future leading to improvements in workflow and customer prioritization.”
This market momentum is reflected in Kore’s growing list of clients, like Airbus, AT&T, Blue Cross/Blue Shield, Cigna, Coca-Cola, LG, PNC Bank, and Roche who are standing-up solutions through pre-built vertical and domain-trained virtual assistants. The company’s performance of 100% YoY growth for the past 4 years and a $100M+ ARR, has also attracted partners and investors—bringing their total paid in capital to $250M.
The Next Level Of Competitiveness
This is all leading to what intrigued me about the funding round, their potential, and the prospects for this emerging AI sector. While the big dogs of Tech., who’ve been pouring tens of billions into AI, are slugging it out in the broader hyped areas of underlying LLM and GAI, Kore is zeroing in on a few key things, effectively holding its ground alongside big tech by unpacking and serving the complexities of the enterprise AI market needs. These strategies, by the emerging growth underdogs, are poised to drive phase two of the AI boom—not just in terms of rich rounds, but basics such as profitability, productivity, results and ROI for global businesses.
To be sure, Kore has competitors, from much larger companies and those that are focused on conversational AI (CAI). All the major AI vendors, including OpenAI, Google and Microsoft that offer the newer breed advanced AI-driven chatbots could be potential competitors—or maybe partners.
So, one critical question remains: is the market big enough?
The short answer is yes. My students know, from my Disrupting the Disruptive Disruptors lecture at Kellogg/Northwestern, that I like markets where the competition is heating up, as it means you are in the right market at the right time—hopefully offering the right stuff. They also know, I’m not a fan of over-consolidation that fuels technology/services oligopolies—so I am usually rooting for the innovative, hungry underdogs.
Speaking of hype, one PWC report that seems a bit rich, stated AI will be “a $15.7 trillion game changer”, impacting the global economy at that level by 2030, while Bloomberg estimates AI to grow into a $1.3T market by 2032. But if we drill down to a SAM level (Serviceable Available Market), Gartner estimates the CAI category to reach $377B by 2032. At this level, companies who serve this sector diligently are in for a lucrative ride. PWC’s most recent 27th Annual Global CEO Survey put a strategic spotlight on it, stating within the next three years, nearly 70% of CEO’s surveyed, anticipate generative AI will “increase competitive intensity, drive significant changes to their business models and how their companies create, deliver and capture value.”
I spoke with Founder and CEO Raj Koneru via Zoom, and he said that his company found its swim lane by looking at the long game from the outset, making the strategic choice to sit above the infrastructure and chaos of all the LLM layers. “We have been laser-focused on serving enterprise AI business needs and understand where the market is headed. The coming together of Conversational AI and Generative AI is creating an unprecedented opportunity for businesses to explore newer solutions and build use cases beyond customer experience and employee experience.”
Enterprise AI Trendlines
Conversational and generative AI go far beyond Copilots or other personal chatbots. The ability to focus on enhancing customer and employee communication within enterprises is becoming the top focus area of many SaaS providers—empowering companies to improve their operational efficiency, enhance customer interactions, and foster seamless communication among employees.
This funding isn’t just another AI company vying to corner the hyper-competitive market. I think it’s a confidence vote trend line in AI’s potential—not just as a buzzworthy technology but as a substantial and systemic enterprise tool. I also see some good reboot lessons here for CEOs: for instance, Kore didn’t seem to chase the hype and valuation games or depend too much on investors early on, which is hard to do. Instead, they probably struggled through the early days to stay focused on building out more diverse solutions that enterprises could deploy for impact. And, oh yeah, something else they did which tech. companies need now more than ever—achieve profitability.
When pressing Koneru on possibly being too specialized or just focused on large enterprises, he added: “As AI advances, we’ve taken it upon ourselves to make this technology easy to adopt. Along with serving enterprises, our expanded vision is to democratize AI applications and help businesses of all sizes including startups, SMBs and mid-markets put AI to work.”
I think Kore.ai is emblematic of what AI companies need to do in phase two—get down to the business of bringing bottom-line benefits to the workplace and companies. While the integration of consumer apps and the fun promise of GAI may take a little more time to gel, investors that are still asking “where’s the beef” (or revenue) can find it in enterprise-grade AI enabled platform providers.
