Just two months shy of its 10-year anniversary, low-code platform maker Creatio is celebrating a different kind of milestone: its newly minted unicorn status.
The company raised a $200 million funding round led by Sapphire Ventures, Volition Capital and Horizon Capital, pushing Creatio’s valuation up to $1.2 billion, the company said Wednesday. Core to the success, in part, is the company's generative AI-powered copilot tool and customer retention levels, according to the startup.
“Generative AI accelerated adoption of tools like low-code/no-code and increased the level of appetite in large organizations to get more aggressive with technology and automation projects in general,” Andie Dovgan, chief growth officer at Creatio, told CIO Dive.
As the company's valuation surpasses the billion-dollar mark, Creatio is joining the vanguard of vendors that have already benefited from enterprises’ AI aspirations.
Attracting enterprise clientele brings in multimillion-dollar budgets that can boost a startup’s ability to hire more talent, add new capabilities and scale. Nearly two-thirds of companies have invested $5 million or more in emerging AI capabilities, according to a SolarWinds survey published this month. Around one-third have already dropped more than $25 million on the technology.
The tsunami of AI use will ultimately push the generative AI market to reach $1.3 trillion in the next decade — equivalent to Florida’s annual GDP in 2023, according to the U.S. Department of Commerce’s Bureau of Economic Analysis — increasing at a compounded annual growth rate of 42%, Bloomberg Intelligence said in a report published earlier this month.
“The AI rally is supported by earnings and has more room to run, in our view,” Blackrock analysts said in a report last week. “We don’t see an AI bubble, and the profitability of mega-cap tech companies stands in contrast to the unprofitable companies driving the dot-com bubble.”
Follow the money
Despite enterprise enthusiasm, venture capital activity related to AI has become relatively flat. Last year marked a slight decline in AI and ML deal activity from the previous year, according to PitchBook analysis.
AI/ML VC deal activity declines
The deflating hype has made enterprise customers an even more appealing target.
Earlier this month, Cohere CEO Aidan Gomez told The Verge the pathway to profitability for his AI startup was via enterprise-focused solutions. With investors like Cisco, Salesforce Ventures and Nvidia, the startup’s current valuation reportedly lands around $5 billion.
But gaining enterprise trust — and sustaining it — isn’t easy.
OpenAI, which sparked the generative AI fever with its November 2022 public release of ChatGPT, has steadily fleshed out its strategy to attract business users. The startup launched ChatGPT Enterprise last August and has added security and privacy guardrails to its services.
With more than 80% of Fortune 500 companies registering for ChatGPT accounts just nine months after ChatGPT’s release, the startup leaped to early dominance in the market. But as AI models and solutions proliferated and percolated to nearly every inch of the IT ecosystem, OpenAI endured a tumultuous period bookmarked by leadership oustings, board upheavals and threats of mass resignation.
The drama was unsettling enough to raise questions about relying on young startups, especially as fallout from the events continues to unfold.
OpenAI isn’t alone. AI startups have undergone key leadership departures and multiple vendors are facing lawsuits brought forth by creators, musicians and authors over alleged copyright violations. Meanwhile, the downstream impact on organizations using vendor-developed AI tools and models is still unclear.
“There needs to be a level of caution given how varied the potential issues and concerns there are with the use of AI technologies,” Thomas Humphreys, compliance expert and content manager at Prevalent, told CIO Dive. “There needs to be a wider ask in terms of managing third parties and methods to audit and assess.”
OpenAI’s internal turmoil highlighted the need for enterprises to instill caution, but it didn’t stifle enterprise interest in its technology. The startup was reportedly valued at $86 billion earlier this year and continues to snag high-profile clientele.
PwC will become the largest customer of OpenAI’s business-focused tool, rolling ChatGPT Enterprise out to more than 100,000 employees in the U.S. and U.K. While the deal’s financial details were not disclosed, securing PwC as a client is notable given the consulting firm serves 89% of the Fortune 500 companies and is now a reseller of the tool.
Professional services firms are making alliances with vendors to capitalize on internal transformations and beef up capabilities for clients. EY and KPMG have widespread Copilot deployments in the works, and Accenture has totaled $2 billion in generative AI-related bookings during the fiscal year, according to its Q3 2024 earnings report last week.
Weighing and mitigating risk
Even with the amount of money and interest devoted to AI plans, CIOs are still in a precarious position.
Generative AI tools and large language models can potentially unlock efficiencies, such as speeding up workflow processes, easing information gathering and expediting draft stages. At the same time, the solutions bring a lengthy list of risks.
“By the nature of the role, CIOs are a bit more skeptical than, for example, people from go-to-market teams,” Dovgan said.
Vendors have tried different routes to fast-track adoption and gain enterprise trust.
PC manufacturers are saying on-prem generative AI implementation is safer and more secure as it relates to IP and sensitive data. OpenAI, Microsoft, Google and AWS have pledged to protect customers from legal claims of copyright infringement via conditional indemnities in contracts.
“Certainly for things like indemnification, some companies accept that, and they’ll say, ‘Okay, that’s good enough for me,’” Andrew Cornwall, senior analyst at Forrester, said. Others worry about hidden legal costs and the time and resources needed to potentially pull out and rewrite chunks of copyrighted code, Cornwall said.
Focusing on maturing controls, safeguards and governance is another tactic. By default, Creatio has around 200 automated controls and offers customers the ability to create their own, Dovgan said.
“A lot of CIOs are still in the process of understanding how generative AI applies to their organization," Dovgan said. "But if you’re the CIO of a sizable company you cannot ignore it.”
