Hebbia, a startup that uses generative AI to search through big documents and find answers to complex questions, has raised $130 million in Series B funding. Andreessen Horowitz led the round, which was worth about $700 million, and Index Ventures, Google Ventures, and Peter Thiel also contributed.
Its funding shows that 50x annual recurring revenue (ARR) is now the rule for AI startups, especially those that have already made millions of dollars in profit early on.
Already reported on most of the details of the formal funding announcement. However, Hebbia continued to raise more money, this time another $30 million, after our story. However, Hebbia has not yet sent the SEC an updated report on this funding round. The most recent report still says that the company is raising about $100 million in new stock.
A person with knowledge of the matter said that Hebbia, which was started by George Sivulka while he was getting his PhD in electrical engineering at Stanford, had an ARR of $13 million and was making money when it was pitching investors on the deal.
In an interview, Sivulka, the startup’s only founder and CEO, wouldn’t say anything about Hebbia’s sales or profits. But he said that in the last 18 months, the startup’s sales have grown by 15 times.
Investors thought Hebbia was worth about 54 times its annualized rate of return, based on its $700 million value. Such high valuations were common at the height of the boom caused by the pandemic, and they are now commonly given to hot AI companies. According to the Information, Glean and Harvey, two companies that were most like Hebbia, were valued at just over 60 times their annualized revenue.
Hebbia was started in 2020, and at first it worked on an AI-powered tool for searching and summarizing. Later, the business changed its name to become an AI expert. Hebbia’s main product, Matrix, can read multiple files of any length and answer users’ questions in a tabular style, like a spreadsheet. Sivulka said that the Matrix can sort through SEC reports and other papers to find information about a company and its rivals and then compare and organize it.
Hebbia’s main customers right now are asset managers, investment banks, and other financial companies. Sivulka said that the startup is expanding its services to other areas, such as law businesses and drug companies.
Sivulka says that 30% of all asset managers already use the company’s product. These managers use Hebbia for study, due diligence, and setting prices for assets, among other things. With the new money, the company plans to hire more people, keep selling to the financial services business, and move into other industries.
The investment bank Centerview Partners, the bank Charlesbank, and the law company Fenwick are among Hebbia’s clients.
People have called Sivulka a “wunderkind.” As a kid, he worked at NASA. It took him 2.5 years to finish his bachelor’s degree in math at Stanford.
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He is also different from other enterprise-focused founders because he has never run a business before and doesn’t have a business-focused co-founder.
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