Intel spinout Articul8 raises more than half of a $70 million round at a $500 million valuation

Article 8an enterprise AI company from Intel in early 2024has secured more than half of a planned $70 million funding round with a pre-money valuation of $500 million, according to its CEO, as it seeks to capitalize on growing demand for AI systems in regulated industries.

The Series B funding round is structured in two tranches, with the first being led by Spain’s Adara Ventures, Articul8 founder and CEO Arun K. Subramaniyan (pictured above, center) said in an interview. He declined to disclose the amount of the initial payment, but said the company plans to close the round in the first quarter of this year.

Articul8’s valuation for its current funding round represents an approximately five-fold increase from the company’s $100 million post-funding Series A valuation in January 2024. Since then, the Santa Clara-based company said it has surpassed $90 million in total contract value – the cumulative value of all signed customer contracts – from 29 paying customers, including Hitachi Energy, AWS, Franklin Templeton and Intel.

Subramaniyan told TechCrunch that Articul8 was not under pressure to raise capital, describing the company as generating positive revenue following a series of deals with large companies.

“We are not short of money,” he said.

The company expects to end the year with annual recurring revenue of just over $57 million, Subramaniyan said, with about 45% to 50% already accounted for.

Articul8 develops specialized AI systems that operate within customers’ computing environments, rather than relying on general-purpose shared models. Instead of selling standalone models, the company presents its technology as software applications and AI agents tailored to specific business functions, targeting regulated industries such as energy, manufacturing, aerospace, financial services and semiconductors, where accuracy, auditability and data control are essential.

“Our competition is pretty much everyone,” Subramaniyan said. “But today the main competitors are cloud service providers, because they have understood that their model, as a generalist provider, [offerings]are all commodities.

He added that Articul8’s focus on specialized systems appeals to clients who need predictable results and clear audit trails, which are more difficult to achieve with general-purpose models running on shared cloud platforms.

Articul8 plans to use the Series B proceeds primarily to expand product research and development and to expand its operations internationally, with a focus on Europe and parts of Asia.

Adara Ventures’ participation will help accelerate the European expansion plan, as the European Investment Fund backs the Madrid-based venture capital firm’s energy fund, Subramaniyan said. The company is also looking to expand into markets such as Japan and South Korea, where it has started working with large enterprise clients, he noted.

India’s Aditya Birla Ventures also participated in the current round, Subramaniyan said.

Articul8 works with large technology groups, including Nvidia and Google Cloud, Subramaniyan said, adding that Amazon Web Services is both a customer and partner of the company on some deployments.

The company employs 75 people, approximately 80% of whom are dedicated to R&D, and teams are located in the United States, Brazil and India.