MOSTLY AI, an Austrian synthetic data firm, revealed today that it had secured a $25 million Series B round of funding. Molten Ventures, a British venture capital company, oversaw the project, which included Citi Ventures, a new investor. Both of MOSTLY AI’s current investors, Munich-based 42CAP and Berlin-based Earlybird, which had led the $5 million Series A investment in 2020, have returned to the company as well.
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MOSTLY AI CEO Tobias Hann said in an interview with TechCrunch that the business intends to use the funds to push the frontiers of what its product can accomplish, develop its workforce, and win new clients, both in Europe and in the United States, where it already has offices in New York City.
A year after MOSTLY AI was established in Vienna, the General Data Protection Regulation (GDPR) was enacted across the European Union. Synthetic data has gained tremendous traction as a result of the increased need for privacy-preserving solutions, as well as the concurrent emergence of machine learning. Gartner expects that by 2024, synthetically generated data will account for 60 percent of all data utilized in the development of artificial intelligence and analytical initiatives.
Most AI’s customers are Fortune 100 banks and insurers, and telecommunications companies. Along with healthcare, these three highly regulated industries account for most of the demand for synthetic tabular data.
Unlike some of its rivals, MOSTLY AI has not focused its efforts on healthcare in the past, but this may change in the future. According to the CEO, “it is absolutely something that we are keeping an eye on, and we are initiating some test initiatives this year.”
According to Hann, who spoke with TechCrunch, the democratization of artificial intelligence will ultimately lead to synthetic data being utilized outside of Fortune 100 organizations. As a result, his business intends to service smaller enterprises and a broader spectrum of industries in the future. However, up until now, it made sense for MOSTLY AI to concentrate on customers in the enterprise-level market.
Hann points out that, for the time being, enterprise businesses have the funds, the necessity, and the skill to deal with synthetic data. MOSTLY AI received ISO certifications to ensure that their objectives were met.
When speaking with Hann, one thing becomes clear: although the firm has a solid technical foundation, it is as committed to monetizing its technology as it is to the added value it can provide to its customers. ACCORDING TO CHRISTOPH HORNUNG, INVESTMENT DIRECTOR AT MOLTEN VENTURES, MOSTLY AI is the leader in this new and rapidly-growing field. “MOSTLY AI is the leader in this emerging and rapidly-growing space, both in terms of client deployments and expertise,” Hornung said.
Synthetic data is obviously in high demand because of the necessity to comply with privacy regulations such as those set out by the General Data Protection Regulation (GDPR) and the Canadian Consumer Protection Act (CCPA). For example, a broader cultural framework also influences demand in Europe, while the market in the United States is affected by a desire to be innovative. Typical use cases include sophisticated analytics, prediction algorithms, fraud detection, and pricing models – all of which are performed without the usage of data that can be linked back to individual users.
“Many businesses are taking a proactive approach to the space because they recognize that consumers place a high value on privacy,” Hann added. “These businesses recognize that dealing with and working with data in a privacy-preserving manner may provide them with a competitive edge.”
More and more U.S. firms are expressing an interest in using synthetic data in novel ways is one of the primary reasons why MOSTLY AI wishes to expand its team in the United States. The company, however, is also hiring more broadly, both in Vienna and remotely. It intends to raise its workforce from 35 to 65 employees by the end of the year.
The year 2022, according to Hann, will be “the year when synthetic data will take off,” and the decade after that year would be “a very great decade for synthetic data.” This will be reinforced by an increasing need for responsible artificial intelligence, defined around essential AI fairness and explainability, among others. Synthetic data may assist in addressing these issues. In addition, Hann stated, “it allows organizations to enrich and de-bias their data sets.”
MOSTLY AI believes that synthetic data has a great deal of promise for use in software testing, putting machine learning to one side. To support these use cases, it is necessary to make synthetic data available to data scientists, software developers, and quality testers. MOSTLY AI released version 2.0 of its platform a few months ago, with the goal of better serving these customers. In a statement at the time, the business said that “MOSTLY AI 2.0 may be installed on-premise or in a private cloud, and adapts to varied data formats of the organization that uses it.”
According to Hann, “We are unmistakably a B2B software infrastructure firm.” During its Series A and B rounds, the firm searched for investors who shared its philosophy on building a business.
Molten Ventures’ status as a publicly-traded venture capital company, which means it is not subject to conventional fundraising cycles, was also taken into consideration, Hann confirmed when I inquired. It was pretty enticing to us to have this long-term commitment from a partner since it allows us to be more flexible with our plans.
It also helps that Citi Ventures is the venture capital arm of Citigroup and that it is located in the United States of America. “We’re rapidly expanding our workforce in the United States, and it’s always beneficial to have an investor with a presence in the country who can assist with network and contacts,” Hann said.
MOSTLY AI will now have additional resources to compete against other firms in its section of the synthetic data field, thanks to the addition of $25 million in new investment and an expanded presence in the United States. This includes competitors such as Tonic.ai, which collected a $35 million Series B round in September; Gretel AI, which announced a $50 million Series B round in October; and seed-funded British company Hazy, as well as businesses that specialize in specific verticals like as healthcare.
According to Hann, “we’re seeing more and more players emerge in this sector and in the market as a whole, which indicates that there’s a lot of interest in this space.”