Another AI investment for Salesforce! $200 million led the Hugging Face investment

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According to The Information, AI startup Hugging Face is recently conducting a D round of financing, led by cloud giant Salesforce, and is expected to receive $200 million, with a valuation double to $4 billion from May last year.

Salesforce has been aggressively investing in AI in recent months, creating a $250 million generative AI venture capital fund that has since expanded to $500 million. In addition, Salesforce has been actively launching new AI capabilities for its products, partnering with OpenAI to launch a ChatGPT app dedicated to enterprise communications platform Slack.

First, hosting hundreds of thousands of AI models such as Llama 2, and doubling the valuation of two rounds of financing

Founded in 2016, Hugging Face initially focused on developing and providing natural language processing related technologies and tools, and is now a community service that helps enterprises and developers build and deploy AI models, known as the "GitHub of machine learning." Hugging Face currently has more than 200 employees, and its platform hosts hundreds of thousands of AI models, including Meta's Llama 2, and its customers include Microsoft, Amazon, IBM and more than 10,000 others.

Hugging Face's vision – "AI community building the future"

Its hosted open-source model is valuable for businesses that don't want to expose their data to AI software providers like OpenAI. Instead of buying a company's proprietary model, companies can train customized versions of open-source models on their own data.

In May 2022, Hugging Face announced the completion of a $100 million Series C funding round, with a valuation of $2 billion. The round was led by Lux Capital, with Sequoia Capital and Coatue participating for the first time, and other co-investors included Addition, Betaworks and other Hugging Face investors.

After the completion of the $200 million Series D financing, Hugging Face's valuation will reach $4 billion, double the previous round of financing. The round was led by Salesforce Ventures, a Salesforce investor, and Salesforce CEO Marc Benioff confirmed the news on his social media X.

▲ Mark Benioff X screenshot

Hugging Face is currently on track to exceed $30 million in annual revenue. The Information speculates that Salesforce's funding may indicate that it sees Hugging Face as a potential future acquisition.

Second, smashing billions of dollars, Salesforce invested in generative AI startups

The value of Hugging Face's funding round reflects investors' continued enthusiasm for AI companies, a trend that The Information believes is sparked by OpenAI.

Developers of AI big models like Anthropic and Inflection AI to AI-driven app developers like Character.AI and Runway have raised money at valuations of $1 billion or more — even though they currently have meager revenues.

In recent months, Salesforce has also been actively funding AI startups.

In March, Salesforce launched a $250 million large-scale generative AI venture fund, surpassing its fiscal 2023 net profit of $200 million. Clara Shih, its AI CEO, said the fund will be used to "nurture the next generation of generative AI startups." Since then, the fund has invested in cutting-edge AI technology companies such as Cohere, Anthropic, and You.com.

▲On May 23, Salesforce announced its investment in Anthropic (Source: Salesforce official website)

On June 12, Salesforce announced the expansion of the fund from $250 million to $500 million. Paul Drews, managing partner at Salesforce Ventures, said in a statement that expanding the fund allowed the company to "work with more entrepreneurs... Accelerate the development of transformative AI solutions for your enterprise."

On June 29, Salesforce announced that it will invest $4 billion in its UK operations over the next five years, focusing on digital transformation and AI. The company said the $4 billion plan is based on its $2.5 billion investment in the UK over the five-year period from 2018 to 2023. Benioff said: "AI is reshaping the world and changing business models in ways we never imagined. In the future, every company will have to put AI first. ”

Third, integrate AI functions into products, and jointly launch dedicated ChatGPT with OpenAI

In addition to investing in AI startups, Salesforce is aggressively incorporating new AI capabilities into its software products as one of its main competitors, Microsoft, is accelerating its advance.

Microsoft's GitHub division sells AI coding assistants, the Azure cloud division sells AI models, and new AI features have also been rolled out in Office 365 apps to summarize text or write essays and emails.

In March, Salesforce and OpenAI launched the ChatGPT app for enterprise communications platform Slack, which provides instant conversation summaries, research tools, and writing assistance directly in Slack.

▲ Salesforce launches ChatGPT app for Slack (Source: Salesforce official website)

At the same time, Salesforce also released its generative AI product, Einstein GPT, which it calls "the world's first generative AI for CRM (customer relationship management)" that can provide AI-created content in sales, service, marketing, commerce and more. For example, Einstein GPT can generate personalized emails for salespeople to send to customers, specific responses for agents to answer customer questions faster, targeted content for marketers to improve campaign response rates, automatic code generation for developers, and more.

Salesforce releases Einstein GPT (Source: Salesforce official website)

On June 12, Salesforce announced the launch of the AI Cloud with Einstein GPT at its core, which combines AI, data, analytics, and automation to deliver real-time generative AI for the enterprise. Rivals such as AWS and Google Cloud have also begun selling AI software, as well as rights to third-party models, as well as dedicated servers for training AI models.

Conclusion: Salesforce is actively chasing the generative AI boom

Salesforce recently led an investment in emerging AI community Hugging Face, whose latest valuation has directly doubled from the previous round of investment. In recent months, Salesforce has continued to actively catch up with the generative AI boom, setting up AI funds and launching AI products.

Salesforce's efforts have also paid off. Its fiscal 2024 first quarter earnings report, released in May, showed that the company's first-quarter revenue was $8.25 billion, up 11% year-on-year. Salesforce is optimistic about the future, expecting second-quarter revenue of $8.51 billion to $8.53 billion, up 10% year-over-year.

Whether Salesforce can achieve this goal in the future, we will continue to watch.

Source: The Information