This morning, Skyflow announced that it has raised a $30 million Series B extension led by Khosla Ventures. The deal is interesting on numerous fronts, including the round’s structure and the way Skyflow has been impacted by the expansion of AI.
The brand new capital comes after Skyflow expanded its data privacy business to support latest AI technologies last 12 months. In an interview with TechCrunch, Skyflow co-founder and CEO Anshu Sharma said that its AI-related software offerings have rapidly grow to be a fabric portion of its total business.
The startup saw its revenues from large language model–related usage grow from 0% to around 30% more recently, implying that the corporate’s growth rate was augmented by market need for data-management services stemming from the info voracity of LLMs.
Skyflow’s business began life as an API that stored personally identifying information (PII) on behalf of consumers. AI has broadened the kind of knowledge that it would contain. In the present era of knowledge accretion — Databricks and Snowflake aren’t household names in tech today by accident — and desire to place that data to work using AI models, ensuring that only approved data is employed by an LLM and the person prompting it, is not any small permissions and governance task.
That the startup is raising more capital now isn’t an enormous shock. After raising a $45 million Series B back in 2021, the corporate told TechCrunch that it deployed a bit of that capital to construct out its regional footprint to higher support data residency rules which can be increasingly vital pieces of regulation for corporations to get right. (In its latest news dump, Skyflow said that it expanded its support of China and that market’s particular data rules.) Just a few years down the road is rarely an odd time to boost more capital, however the indisputable fact that the round got here in smaller, and in the shape of an extension, did catch our eye.
When asked why Skyflow is asking the round an extension as a substitute of a Series C when it was raised at a rather different valuation, Sharma said that his firm and its customers don’t really care what a round known as. “Money is money to us,” he said. What matters more, in his words, is that his company saw “very low dilution and [was] capable of raise capital to grow even faster.” Fair enough.
There’s a bit more to the round name that’s price our time, nevertheless. Sharma said that he learned from talking to enterprise capitalists for this latest round that late-stage investors are pulling back on how much they’re investing, while investors that he put under an “early growth” tag were more energetic. So, by calling the round a Series B extension, he could higher tune his fundraising process. Sharma also stressed that Khosla Ventures has made numerous AI investments, making the firm aware of the importance of knowledge privacy and security inside corporate LLM usage.
In a canned statement, Vinod Khosla said that as “the necessity for trust and privacy infrastructure is essential to protecting sensitive data,” making a tool to be sure that data doesn’t leak in any context is “vital for each enterprise business.” Hence the Skyflow deal.
In broader growth terms, Skyflow greater than doubled in size last 12 months, expanding its revenues by 110%. Sharma declined to get specific regarding what revenue type that figure was tied to, be it annual recurring revenue or trailing revenue or similar. But he did say that the firm is now within the double-digit million revenue realm.
This Skyflow round slots neatly into several trends we’ve observed recently. Startups that raised at the height of the 2021 enterprise froth are actually looking for more modest capital follow-on rounds. The explosive growth in AI is creating healthy businesses for LLM infrastructure and support corporations. And, finally, corporations that supply their tools via an API are still doing quite well, even when usage-based pricing has taken some bruising lately.
Given how quickly AI-related data privacy work has grow to be a key revenue plank for Skyflow, its growth will provide us a window into how quickly enterprise demand for LLMs expands, and just how much money you may make selling digital picks and shovels on this, the newest software gold rush.
