Paris has quickly established itself as a major European centre for AI startups, and now another deal in the works could cement that position even further.
Poolside.ai, a generative AI company based out of Paris that is building tools to speed up software development, is raising at least $400 million, on a post-money valuation of $2 billion, sources tell TechCrunch.
Sources tell us that Bain Capital Ventures and DST are in talks to co-lead the round. BCV is a previous company backer, and DST is a new investor. Bain’s participation has been previously reported, with PitchBook noting this to be an estimated $450 million round.
Poolside made a splash (ahem) last August when it became yet another AI startup in the city to raise a big seed round. It picked up $126 million from backers that included, in addition to BCV, early-stage specialists like London’s Air Street, Abstraction and Scribble Ventures, and New Wave and First from France. Bpifrance, Felicis, Point Nine, and Redpoint were also in the round. None of the investors we contacted would comment on this story. Poolside’s CEO did not respond to our request for comment.
Mistral and H, two foundational model companies, are among those that have also raised 9-figure seed rounds (respectively $113 million and $220 million) out of the city. The City of Light might need to be renamed the City of AI at this rate.
Looking at the bigger picture, it feels at times like the market has gotten very overheated, very fast, for AI startups, which collectively are raising many billions of dollars when you also include the likes of Anthropic and OpenAI. Do we need another foundational AI company, you might ask?
There are several reasons why Poolside is getting this level of funding to take its big swing at the generative AI opportunity:
–Strength of the founding team and its connection to the company’s premise. Both are steeped in the world of developer tools and DevOps. One founder, CEO Jason Warner, was the CTO of GitHub and led engineering for Heroku and Canonical. The other, CTO Eiso Kant, previously founded Athenian, which had built a series of tools for developers to help them optimise how they build and work. (That company was acquired by the Linux Foundation for an undisclosed sum.) Warner was also previously a VC at Redpoint and knows the value and language of the interaction between VCs and founders.
– The problem being solved. Unlike those building foundational LLM models that are more generalized in their approach, Poolside (for now at least) is looking at one use case in particular: helping developers work faster. This will resonate with investors and is reminiscent of a memorable essay written by Paul Graham many years ago about startup ideas, and building tools that you know you would need, which by default means that founders and likely other technologists should need.
Although the likes of Mistral also have a focus on developers and developer tools, not to mention Microsoft’s adaptation of OpenAI for GitHub (indeed OpenAI is all about its APIs which are also used by developers), there have been some notable examples of how code is one of the more problematic blind spots (again, for now at least) for more general LLMs. Right now, there is a window of opportunity to build this and build it better than a more generalist approach.
That’s not to say that Poolside is not also thinking big. In a three-step plan outlined on its website, it notes that eventually, it hopes to work, after developers, with anyone who wants to write code and software; and then, after that, “Generalize these capabilities beyond software to all other fields.” NBD!
– Early signs of what they have built. What I have not seen is whether the company has released a product yet in general availability, but there is some evidence that they are working and growing (and perhaps running in private beta?). Its compute supplier, IREN, in April, reported that Poolside had ramped up its cloud services deal with the company.
– Last but certainly not least, there is monetization. As one source close to the company said to me, there are many examples of AI addressing different areas of the market, but not many have clear indications – much less proof – of monetization potential. (Yes, the big deal that OpenAI inked with PwC could open the door to more enterprise business, but that might be a years-long effort; meanwhile, it remains to be seen what take-up at any enterprise might look like.)
With Poolside, however, if you consider the opportunity and scale of building co-pilot tools for developers, it may well be one of the best and most straightforward places to apply AI, if done right. It’s a clear, large need and all computer programming has syntax, so it’s not nearly as open-ended as so many other areas where AI is being applied. Plus, it has constraints, and indications of performance, and benchmarks – a winning combination for investors and startups looking to build businesses.
