Snowflake in Talks to Buy Search Startup Neeva in AI Push
Database software provider Snowflake has been in advanced talks to acquire Neeva, a search startup founded by former top Google ad tech executive Sridhar Ramaswamy, according to a person with direct knowledge of the discussions. Buying Neeva could help Snowflake offer artificial intelligence software that helps companies search for information in internal documents and data, according to people who do business with Snowflake.
Neeva primarily sells an ad-free web-search app for consumers, but it developed software that combines search with large-language models, which are trained on text to understand the nuances of speech and writing. That could fit with Snowflake’s efforts to help cloud customers use the kind of AI popularized by chatbots like ChatGPT that respond to conversational commands and can automate some business tasks. Snowflake is trying to catch up to rivals such as Microsoft’s Azure and Google Cloud that already sell access to such AI software.
THE TAKEAWAY
• Snowflake aims to raise profile in AI
• Deal illustrates emergence of new kind of database
• Neeva’s search service has struggled
The deal shows how the emergence of ChatGPT is shaking up the enterprise software market, prompting companies such as Snowflake to rethink their growth strategy.
Terms of the deal couldn’t be learned. Neeva’s private pre-money valuation was around $250 million at the time of its last announced funding round in 2021. Neeva, which has dozens of employees, including other ex-Googlers, also has shopped itself to Databricks, a rival to Snowflake, according to a person with direct knowledge of the talks and a second person briefed on them.
Neeva was founded in 2019 and raised nearly $80 million from Greylock Partners, Sequoia Capital and other investors to take on the difficult task of competing with Google. Neeva’s subscription search service doesn’t appear to have gained a lot of traction, but in January the company received attention for incorporating its own large-language models to give humanlike answers to queries. Behind the scenes, Neeva also developed what’s called a vector retrieval system and database, a way to store and organize data the LLMs use to deliver answers to search queries.
Snowflake’s main product is a type of cloud database for corporate data, but the company is angling to be a one-stop shop for businesses that use machine-learning models, according to one of the people who do business with Snowflake. In January the company acquired Myst, which sold software for developing machine-learning models to predict future events based on historical data. Snowflake may also benefit from the sudden proliferation of free, open-source LLMs could bring down costs and make it easier for businesses to use the technology.
Snowflake faces fierce competition in selling cloud-based AI services, but it could lean on its reputation as a secure service for businesses to store sensitive data. Snowflake’s service utilizes cloud servers from Amazon Web Services and other major cloud providers but Snowflake developed its own software that manages users’ access to data as an added security measure.
That could make Snowflake appealing to companies, some of which are concerned around leaking data to OpenAI and other developers of large-language models. Those models are trained on vast amounts of text scraped from the internet as well as information users feed into the chatbots when they converse with them.
Snowflake, which has a market capitalization of $55 billion, wants to ensure that customer data stays private and doesn’t end up in the training set, just as Microsoft has done with a cloud service that gives customers access to machine-learning models developed by ChatGPT creator OpenAI, the person said. Microsoft is also preparing to sell access to a version of ChatGPT to businesses worried about data leakage, The Information recently reported.