Our Journey with Deci.AI: Advancing AI’s Development
Written by Victor Orlovski, General Partner at R136 Ventures
Unveiling the Backstage of Generative AI
In the rapidly evolving landscape of artificial intelligence, where industry giants like OpenAI, Google, and Meta lead the charge, the momentum is undeniably swift. As generative AI propels human productivity to new heights, it’s crucial to spotlight the infrastructure and tools that form the backbone of these groundbreaking advancements. Central to the functionality of these transformative AI platforms are deep language learning models (LLMs) that excel in natural language processing.
~$6 Billion — Infrastructure segment within GenAI core IT spending estimate in 2023. Source: PitchBook, IDC
Their success hinges on the development tools that ensure these systems are both efficient and cost-effective.
Introducing Deci.AI
Such a tool is provided by Deci.AI, which offers an end-to-end deep learning platform and stands out as a notable player in the industry, at the forefront of Generative AI success. The platform’s offerings include the ability to generate models using proprietary engines or to select from a range of pre-generated high-performance models. It also enables training and fine-tuning through Deci.AI’s libraries or custom recipes and provides cost-effective optimization for deployment and inference. Deci.AI addresses critical challenges in AI model development, such as lengthy development cycles, suboptimal performance, and high operational costs.
R136 Ventures, upon meeting Deci.AI’s founders, was struck by their passion and the potential market opportunity, leading to a decision to back the company with both Series A and Series B funding during 2021–2022. This was in partnership with leading venture capital firms such as Insight Partners, Vintage Investment Partners, Square Peg Capital, Emerge, and others.
The company’s performance led to its inclusion in the CB Insights AI 100 2021 Ranking with top companies in the artificial intelligence space.
The Investment Rationale
Team. The journey began with a talented, visionary team. Yonatan Geifman, PhD, Jonathan Elial, and Prof. Ran El-Yaniv, widely recognized in Israel, are the masterminds behind Deci.AI. With strong backgrounds in mathematics and computer science from Israel’s esteemed Technion, coupled with a deep-seated passion for deep neural networks and entrepreneurial zeal, they have crafted a product that resonates with the needs of the AI industry, assembled by Israel’s top deep learning talents.
Platform. This team’s efforts culminated in a platform distinguished by its technological moat and unique differentiators. It offers developers the tools to build models from scratch and optimize them for the hardware on which they will be deployed. These features are integral to Deci.AI’s comprehensive end-to-end capabilities.
Go-To-Market. Deci.AI’s platform provides a clear and quantifiable value proposition for its go-to-market strategy.
Traction. The company’s early success attracted prestigious partners like Intel, AWS, NVIDIA, and HP, and it managed to secure significant clients and promising proof of concept (POC) projects, even at its nascent stage in 2021. The platform’s innovation has earned recognition from industry authorities such as Gartner and MLPerf.
Navigating Challenges to Success
Since our investment, Deci.AI has navigated through significant global upheavals, including a market downturn, a banking crisis in the US, and geopolitical tensions in Israel. Despite these challenges, the team has demonstrated remarkable resilience and adaptability. R136, as a board member, alongside other investors, played a role in guiding the strategic decision-making process and facilitating potential partnerships.
This strategic positioning allowed Deci.AI to capitalize on the generative AI boom. The team rapidly adapted their product to meet the demands of generative AI, developing LLM models that outperformed benchmarks and setting the stage for new global opportunities (as an example, check recent update on Generative AI platform update from Deci.AI unveiling better cost efficiency and control levels).
Reaching a Decisive Moment
As the product matures and cements its relevance, it naturally piques the interest of strategic acquirers seeking to enhance their technological suites. Indeed, the most advantageous business deals occur when companies are pursued for their value, rather than actively seeking a sale. Deci.AI’s performance in the realm of generative AI caught the eye of one of its key partners, NVIDIA, culminating in a landmark deal that validates Deci.AI’s technology and strategic vision.
Based on R136’s team track record of selling companies to strategists, we have observed that the best deals occur when the acquired companies are allowed to keep their team and continue developing products in synergy with existing operations, without full integration and dissolution. Deci.AI has developed a complementary product for NVIDIA, providing a great opportunity for Deci.AI’s team to contribute to the AI field under the umbrella of a fast-growing corporation, with access to enormous resources, advanced technologies, and a full focus on product development without spending much time on operations, administration, and fundraising.
Drawing on R136 Ventures’ extensive experience with exits by acquisitions, the optimal outcomes often arise when acquired companies retain their teams and continue to innovate in harmony with the acquirer’s operations, without being fully absorbed or losing their identity. For Deci.AI, this partnership with NVIDIA offers a golden opportunity to contribute to the advancement of AI under the aegis of a dynamic corporation. With access to NVIDIA’s vast resources and cutting-edge technology, Deci.AI’s team can now focus on product development while shedding the administrative burdens of operations and fundraising.
”NVIDIA’s expertise in AI will be complemented by Deci’s capabilities in NAS, which automates the design of deep learning models to improve performance. Deci’s engineering team has knowledge in NAS, Foundational Models, Inference and in developing complex algorithms.” Source: NVIDIA’s comment to CalCalIsTech
Lessons Learned
Track to acquisition is unpredictable. Some have questioned us whether Deci.AI’s founders and investors intentionally guided the company towards acquisition by NVIDIA. That was not the case, as NVIDIA was important but still one of the partners, recognizing the great value of the product for its strategy. R136 prefers to support companies with a diversified and long-term vision of independent growth, such as Deci.AI. However, some exits may appear serendipitous, as it is challenging to predict — we’ve had three exits in the past two years, which were initiated by external offers rather than a deliberate sales strategy.
Readiness is vital. It’s important to mention that companies, upon reaching a certain level of maturity, must be prepared for unexpected acquisition opportunities, as corporations tend to close deals quickly, if necessary. Such readiness involves maintaining audited financials, detailed management accounts, clear financial models, transparent corporate structure, and updated datarooms.
Mutual alignment is crucial. Successful acquisitions hinge on the alignment of interests among founders, investors, and acquirers. Balancing these interests can be complex but is essential for a smooth and mutually beneficial transaction. Ensuring that all parties are on the same page is a crucial aspect of any successful deal.
Congratulations to the Deci.AI’s team as they embark on this exciting new chapter in their mission to push the boundaries of AI technology. R136’s team is honored to have been a part of their journey and is confident in their continued success. We extend our best wishes to Deci.AI for their future endeavors and are eager to witness their continued contributions to the field of artificial intelligence.
