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| (Adriana Hansen/PitchBook News) |
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To get AI bots hired by enterprises—and kept on the payroll—investors agree it's all about the context and memory layer in those systems.
But it's not clear yet whether providing that layer is a veritable business opportunity for startups, or whether the large AI models will fill that gap, too.
Despite growing corporate enthusiasm about deploying AI throughout workflows, many companies are still figuring out where and how they can best benefit from these novel tools. AI has not yet fulfilled its promise of revolutionizing all businesses.
"The value in AI is shifting toward context, and every company wants to own its own context—every company is protective of it," Vijay Reddy, partner at Mayfield, told PitchBook at the HumanX conference in San Francisco. "The holy grail is all the right information coming to you at the right time without you having to ask for it. Every application selling into the enterprise wants access to the context. Now the question is, who builds it and who owns it?”
The memory and context layer is the infrastructure that lets AI tools remember things like certain processes, workflows, preferences and relevant histories across a user's sessions. With that accumulated knowledge, AI systems can give better, more relevant and tailored responses over time.
Several memory and context layer startups are already gaining traction and capturing investors' attention. But it isn't clear if these companies will build enduring businesses or if they'll be made obsolete by large LLM companies building out similar capabilities.
I'm Jacob Robbins, and this is the Weekend Pitch. You can reach me at jacob.robbins@pitchbook.com. |
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| KKR's Henry Kravis, from left, and George Roberts (Patrick T. Fallon/Getty Images) |
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KKR recently closed its latest North America-focused buyout fund on $23 billion, among the largest ever. Which firm holds the largest buyout fund on record?
A) CVC Capital Partners
B) Thoma Bravo
C) Clayton, Dubilier & Rice
D) Blackstone
Find your answer at the bottom of The Weekend Pitch! |
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A selection from our most-read articles of the past few days.
- JPMorgan's CEO is puzzled by the lack of PE-backed public listings. Investors are still hesitant to take their portfolio companies public, but what happens if market conditions get worse? Read more.
- Private markets are winning in the Champions League. With the tournament still underway, see the five teams that have a VC, PE or private debt connection. Check out the bracket.
- Are Canada's pension funds using the wrong benchmarks? Known as some of the most highly-regarded institutional investors in the world, the Maple Eight's recent weak performance may not be exactly what it looks like. Get the story.
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“Most companies have limited visibility into where their AI spend is going, which models are delivering value, and where they’re burning tokens on low-impact tasks. That gap is driving demand for observability tooling, and it will accelerate as AI usage continues to scale.”
—Derek Hernandez, PitchBook analyst, discussing the emergence of LLM observability startups, which help businesses monitor how they use AI. Read more about how developer operations startups keep defying broader slowdowns in VC investing here. |
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Answer: A
In 2023, CVC Capital Partners closed its namesake Fund IX on $29.5 billion, marking the largest buyout fund on record. Read more about mega-funds and KKR's latest haul here. |
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This edition of The Weekend Pitch was written by Jacob Robbins and Nadine Manske. It was edited by Kia Kokalitcheva and John Moore.
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