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Over 300 organizations rely on The Information for exclusive insights into public and private companies, including in-depth analysis of the ways in which tech moves markets. Click here to contact our corporate and enterprise team to learn more. Welcome back! Artificial intelligence startups aren’t just chasing capital. They’re seeking deals for customer data. As my colleague Kevin and I reported earlier this week, enterprise software firms such as Salesforce, Notion and Atlassian are limiting other companies’ access to customer data they host. The reason seems to be that AI startups like Glean threaten these software firms by making it easier for customers to search and analyze their data in the enterprise apps, such as Slack. Venture capitalists are watching this brewing fight over data closely and trying to determine which startups will or won’t get squeezed. Other than Glean, companies like Celonis, which sells software for improving business processes, or Cresta, whose AI analyzes call center conversations, are navigating fights of their own over access to data. Ethan Kurzweil, co-founder of early-stage venture firm Chemistry, said the tension over corporate data echoes the early days of Facebook, when developers such as Zynga released apps like Farmville on the social network to grow their users. But when Facebook changed access to algorithms that cut down on games spam, developers’ growth cratered. “If the data needed to train a particular AI system is owned by someone else, you really need to evaluate the openness of that ecosystem,” Kurzweil said. In some cases, companies will respond to data concerns by securing direct relationships with content providers. Since Salesforce announced data access limits involving Slack, Glean has been talking to Salesforce about how to let Glean and other companies use Slack data without having to copy or move it, we reported. Incumbents limiting access underscores “just how rapidly these AI startups are gaining ground on the product front,” said Sarah Guo, founder at early-stage venture firm Conviction. Jake Saper, managing partner at early-stage software venture firm Emergence, said that it helps if AI startups don’t rely on data that customers store in other enterprise apps. He pointed to his investment in Unify, a startup that helps enterprises find potential sales prospects before sales managers enter leads into Salesforce or other customer relationship management software. “By playing upstream of [Salesforce], Unify owns their own data.” “On the one hand, [Salesforce CEO Marc] Benioff making this move” to wall off data from startups “could be the starting gun for other” established enterprise software companies to consider it,” Saper said. “My hunch is other CEOs of software companies are going to wait and see how this goes.” Here’s what else is going on… Dual Tracks If you’re fundraising, it means you’re on sale. Or at least that’s what it feels like for AI startups right now. As my colleague Kalley and I reported last month, Meta Platforms held acquisition talks with both AI search startup Perplexity and SSI, a research lab founded by an OpenAI co-founder, while the two companies were raising double-digit billion-dollar rounds. Glean also received acquisition interest from Atlassian in late 2023, just before finalizing its funding round that valued the company at $2.5 billion. Meanwhile, Cursor received acquisition interest from OpenAI and instead raised its $10 billion round earlier this year. These situations are notable. Existing investors who are large enough to influence the decisions are forgoing the opportunity to cash out, and instead are investing even more into a locked-up asset at a higher price. Some of this behavior likely reflects the prevalence of mega funds. They are writing large checks and need big public offerings to generate worthwhile returns. Still, I expect such acquisition offers to continue, given the deep pockets from companies such as Meta and Apple, which can’t sit out this AI race. Fund Scoops - Khosla Ventures filed securities paperwork indicating that it is targeting a fundraise of $3.95 billion across three new funds, slightly higher than a target reported last fall, I scooped yesterday.
- Venture firm B Capital, which has backed AI startups including Perplexity, Writer and Poolside, has closed $307 million for a new fund focused on early-stage investments. The fund is slightly larger than the firm’s first dedicated early-stage fund, which closed $250 million in 2022. The fund has not been previously reported. B Capital did not respond to requests for comment.
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