Cupertino startup Vectara Inc. is the latest company to cash in on the artificial-intelligence boom.
The developer of search software for enterprise customers announced Tuesday it's raised $28.5 million in a supersized seed round. Vectara uses AI — including the latest version, generative AI, which can mimic human-created text and images — to power its search technology.
One of the early flaws of generative AI is that the technology has a tendency to make up information — a process that's been called having hallucinations. When it incorporated generative AI into its search last month, Vectara's attempted to address that flaw by including citations with its search results, Amr Awadallah, its CEO and cofounder, told the Business Journal.
"If you're going to be using this within an enterprise setting, you cannot have something making up answers," Awadallah said. "It has to be always grounded in true facts that that company has."
Vectara's search service uses AI technologies such as natural language processing and large language models to comb through and parse corporate data. When a user types a query — often in the form of a question they might speak aloud — the service responds with a short answer that summarizes the information it's found, complete with links to its sources.
Customers can integrate the search software into their systems for free. The company doesn't charge customers until they exceed 15,000 queries a month or want to index more than 50 megabytes of data. For clients that exceed those limits, Vectara charges $1.25 a month for each additional 1,000 queries or 5 megabytes of data. It also offers premium plans with additional queries, capacity and features.
According to Awadallah, most of its customers are using its search service for customer support and research.
Vectara emerged from stealth late last year, not long before OpenAI LLC sparked the generative AI boom with its launch of the ChatGPT chatbot. Since then, Alphabet Inc.'s Google LLC has announced plans to integrate generative AI technology into its search engine and Microsoft moved to incorporate ChatGPT into its rival search service.
Other companies, including ServiceNow, have been announcing plans to include generative AI in their enterprise software offerings.
Despite the tech giants entering the arena, Awadallah said he’s confident Vectara can compete.
"While I see a lot of competition happening, I look at that as healthy competition, because it's validation that this is a very, very important problem to solve," he said.
According to Markets and Markets, the cognitive search market is expected to be valued at $15.28 billion by the end of year.
Race Capital led Vectara's new round, while Emad Mostaque, CEO and founder of Stability AI Ltd. participated in the deal. The company also added Matei Zaharia, co-founder and chief technologist at Databricks Inc., to its board of advisors.
Vectara plans to use its new funds to integrate voice capabilities into its service and to up its marketing efforts, Awadallah said. The company is looking to raise a Series A at the start of next year, he said.
