Intel spinout Articul8 raised more than half of its $70M round at a $500M valuation

Article 8enterprise AI company spun out of Intel in early 2024has secured more than half of its planned $70 million funding round at a pre-money valuation of $500 million, according to the CEO, as it looks to expand demand for AI systems in regulated industries.

The Series B funding round is structured in two tranches, the first of which is 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 initial installment, 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 an approximately five-fold increase from the company’s $100 million post-money series A valuation in January 2024. Since then, the Santa Clara-based company says it has exceeded $90 million in total contract value – the cumulative value of all signed customer contracts – from 29 paying customers, AWS, and Franklin Energy.

Subramaniyan told TechCrunch that Articul8 is under no pressure to raise capital, describing the company as having positive results after several large corporate contracts.

“We don’t have any money,” he said.

The company expects to finish the year with annual recurring revenue of more than $57 million, Subramaniyan said, with roughly 45% to 50% recognized.

Articul8 develops custom AI systems that operate within the customer’s own IT environment, rather than relying on a shared, general-purpose model. Instead of selling stand-alone models, companies package their 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 important.

“Our competition is almost everyone,” Subramaniyan said. “But today, the main competitor is the cloud service provider, because they understand that the model, as a general purpose (offer), is all a commodity.”

He added that Articul8’s focus on custom systems appeals to customers who require predictable results and a clear audit trail, which is more difficult to achieve with a general-purpose model running on a shared cloud platform.

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

Adara Ventures’ participation will help accelerate its European expansion plans, as the European Investment Fund backs the Madrid-based VC firm’s energy fund, Subramaniyan said. The company also wants to scale in markets including Japan and South Korea, where it has begun working with large corporate customers, he said.

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

Articul8 works with large technology groups including Nvidia and Google Cloud, Subramaniyan said, adding that Amazon Web Services is a customer and partner for the company in several deployments.

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