August 20, 2024

Draft picks

Hi there,

OpenAI is doing more M&A deals.

In the last year, it’s picked up:

Global Illumination: an AI design studio building creative tools and infrastructure.
Multi: a video platform for remote team collaboration across shared screens.
Rockset: developed an approach to speed up data retrieval and processing for AI systems.

Notably, the Rockset and Multi acquisitions, which were announced in June 2024, highlight OpenAI’s focus on bolstering its enterprise offerings.

Multi’s team is reportedly joining OpenAI’s ChatGPT desktop unit, while Rockset’s tech could boost OpenAI’s real-time data capabilities for enterprise applications like financial analysis.

Here’s what the AI-driven Acquisition Insights on CBI thinks about the rationale for these moves.

Broadly, OpenAI’s 3 acquisitions share a few common traits. They are:

Small teams with strong talent
Relatively early in their commercialization efforts
Developing enterprise AI tools or infrastructure

The shortlist

Using this criteria and CB Insights data, we built a shortlist of 60+ potential OpenAI M&A targets.

The list focuses on emerging AI players with strong management teams that the company could go after next to sharpen its B2B focus. We actually have built an algorithm to score the quality of management teams (founders, CEO, and execs) as can be seen below.

Note: Mosaic and Commercial Maturity scores are as of 08/12/24 — data is dynamic and scores are subject to change.

Here are the criteria we used to narrow down the search:

75 or fewer employees
B2B business model
Commercial Maturity of 1 (emerging), 2 (validating), or 3 (deploying)
Mosaic score of at least 600 (Mosaic measures private-company health, from 0 to 1,000)
Top 5% Management Mosaic score

We also filtered out startups focusing on industries or applications where OpenAI is less likely to make moves, such as agtech, real estate, or physical security.

CB Insights customers can access the full search — as well create their own lists of targets in a matter of seconds — on the CBI platform.

Bull’s-eye

Here’s one target (customers can access additional analysis here) that stands out for its potential overlap with OpenAI’s interests: mid-stage Coactive.

Coactive is an AI platform for analyzing and managing unstructured visual data.

Why it could be a good fit for OpenAI:

Extracting more value from visual content could be useful as OpenAI doubles down on multimodal AI systems like its GPT-4o model.
OpenAI could leverage Coactive’s existing partnerships with Databricks and AWS to tap into enterprise customer bases.
Coactive’s founding team has previous experience working at Meta, Pinterest, Google, and MIT.

More detail on Coactive can be found in its CB Insights Scouting Report.

Looking ahead

OpenAI’s enterprise push is yielding early strong results. Users of its ChatGPT Enterprise offering grew 4x from 150,000 in January 2024 to 600,000 in April 2024.

In May, OpenAI signed an agreement with PwC to resell its tools to other businesses. Expect more moves (both M&A and partnerships) here.

I love you.

Anand

@asanwal

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