Hebbia, a startup that uses generative AI to search documents at scale and answer questions at scale, raised a $130 million Series B led by Andresen Horowitz, with participation from Index Ventures, Google Ventures and Peter Thiel, at a valuation of roughly $700 million.
And this funding shows that 50x annual recurring revenue (ARR) is becoming the norm for AI startups, especially those that have booked millions of dollars in revenue in the early stages.
The official funding announcement confirmed most of the details previously reported by TechCrunch, although Hebbia went on to raise an additional $30 million after our coverage. However, Hebbia has yet to file an updated disclosure with the SEC about this funding round, and current updates still state that it raised about $100 million in new equity.
Founded by George Syvulka, a Stanford University PhD candidate in electrical engineering, Hevia had $13 million in annual recurring revenue (ARR) and was profitable at the time it was pitching the deal to investors, according to a person familiar with the matter.
In an interview with TechCrunch, Sivulka, the startup's sole founder and CEO, declined to comment on Hevia's revenue or profit margins, but he did say the startup's revenue has grown 15x over the past 18 months.
The $700 million valuation means investors valued Hevia at about 54 times ARR. Such lofty valuations were common at the height of the pandemic boom but are now routinely attached to buzzy AI startups. Hevia's closest peers, Green and Harvey, were valued at just over 60 times ARR, according to a report by The Information.
Founded in 2020, Hevia initially worked on developing AI-powered search and summary tools. The company has since reinvented itself as an AI analyst. Hevia's flagship product, Matrix, can ingest multiple files of unlimited length and respond to user inquiries in a spreadsheet-like table format. For example, Matrix can comb through SEC filings and other documents to organize and compare information about a particular company and its competitors, Civulka said.
Hevia currently sells its software primarily to asset managers, investment banks and other financial institutions, but the startup is expanding its reach to other sectors, including law firms and pharmaceutical companies, Mr. Civulka said.
Sivulka said the company's product is already used by 30 percent of all asset managers, who use Hevia for due diligence, asset pricing and other research. The new funding will be used to grow the team, continue selling to the financial services industry and expand into other verticals.
Hevia's client list includes investment bank Centerview Partners, Charlesbank and law firm Fenwick.
Syvulka has been called a genius: He worked for NASA as a teenager and graduated from Stanford University with a bachelor's degree in mathematics in two and a half years.
He also sets himself apart from other enterprise-focused founders in that he has no direct business experience or business-focused co-founders.