Snowflake Inc. is in talks to buy startup Reka AI for over $1 billion. This move aims to enhance Snowflake’s generative AI capabilities, according to sources.
Reka AI creates large language models. These models, trained on vast internet data, perform tasks like captioning images or serving as customer support chatbots. Founded in 2022 by researchers from Google and Meta, Reka was valued at around $300 million in a 2023 funding round that included Snowflake’s venture arm, as reported by Reuters.
Snowflake, which develops tools for organizing and analyzing cloud data, sees generative AI as a boost to its business. In April, the company released its own large language model, Arctic. Additionally, it allows customers to use third-party AI models, including those from Reka, on their data within Snowflake.
However, the discussions might not lead to a deal, according to sources who wished to remain anonymous due to the private nature of the talks. A Snowflake spokesperson declined to comment, and Reka could not be reached for comment.
Sridhar Ramaswamy, who spent 15 years at Google, became Snowflake’s CEO earlier this year. Previously, Ramaswamy was the firm’s Senior Vice President of AI. He joined the firm last year when the company acquired Neeva, an AI-powered search engine.
Snowflake’s shares have fallen 17% this year, underperforming the iShares Expanded Tech-Software Sector ETF, which has risen 3.3%. In 2023, the company experienced slower revenue growth as many businesses reduced their software purchases. This cost optimization trend also impacted cloud providers like Amazon and Microsoft.
Technology giants are eager to partner with or acquire startups in the competitive generative AI field. Microsoft has funded OpenAI’s projects and recently hired many staff from Inflection AI. Qualcomm Inc. is collaborating with semiconductor startup Ampere to develop AI-focused chips. Meanwhile, Salesforce Inc. has invested in several AI startups to integrate the technology into its customer-focused apps.
Databricks, often seen as Snowflake’s main competitor, has also launched its own open-source large language model. Last year, it acquired AI startup MosaicML for $1.3 billion. As of September, Databricks was valued at $43 billion, while Snowflake’s market value is around $55 billion.
