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

Article8an AI company spun out of Intel in early 2024 has secured more than half of a planned $70 million funding round at a pre-money valuation of $500 million, according to its CEO, as it looks to capitalize on growing demand for AI systems in regulated industries.

The Series B funding round is structured in two installments, with the first 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 size of the first tranche, but said the company expects to close the round in the first quarter of this year.

Articul8’s valuation for the current funding round marks a roughly fivefold increase from the company’s $100 million post-money Series A valuation in January 2024. Since then, the Santa Clara-based company said it has exceeded $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 having positive revenue after a series of large enterprise contracts.

“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, of which about 45% to 50% has already been recognized.

Articul8 develops specialized AI systems that work within customers’ own IT environments, rather than relying on shared, generic models. Rather than selling standalone models, the company is packaging its technology in the form of 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 critical.

“Our competition is pretty much everyone,” Subramaniyan said. “But today the biggest competitors are cloud service providers, because they have realized that their model has a general purpose [offerings]are all commodities.”

He added that Articul8’s focus on specialized systems appeals to customers who need predictable results and clear audit trails, something that is harder to achieve with general-purpose models running on shared cloud platforms.

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

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

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

Articul8 has partnered with major technology groups including Nvidia and Google Cloud, Subramaniyan said, adding that Amazon Web Services is both a customer and a partner for the company in some deployments.

The company employs 75 people, with approximately 80% focused on R&D, and its teams are spread across the US, Brazil and India.