H2O.ai

Pre-IPO

Open source machine learning platform, where everyone can create artificial intelligence for their target tasks

Mark Price
$27.50 +234% a year
Annual Price chg.
+234%
Valuation
$1.70B
Funds Raised
$251M
Last Round
$100M 2021
Round Date
2021, E

About the Company

H2O makes artificial intelligence accessible to everyone. The company has launched a machine learning platform, which helps organizations to create AI, such as for app development and data analysis. That's an easier and a cheaper alternative to outsourcing third-party AI and data science specialists.

H2O offers an open-source platform, which gives the customer more freedom and opportunities to customize the final product for their private needs.

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The company is the trusted AI partner to more than 20,000 global organizations, millions of data scientists and over half of the Fortune 500. For example, it works with Cisco, Intel, PwC, PayPal, AT&T, Citi, Procter & Gamble.

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H2O was proclaimed the global visionary by Gartner 2021 Magic Quadrant (list of top companies in its segment) for Data Science and Machine Learning platforms, as well as in the category of Cloud AI Developer Services.

Business Growth Phase

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Market Opportunities

The global machine learning market size stood at $11B in 2020 and is projected to reach $152B in 2028 with expected CAGR of 38.6% during the forecast period. According to Algorithmia research in 2021, 50% of companies plan to increase their spending on machine learning and AI as a result of the pandemic, 20% said their budgets are to be increased “significantly.”

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During the pandemic, companies faced many difficulties, including labor shortage and supply-chain disruptions. They are increasingly turning to AI technologies to improve their work efficiency.

The company's CEO Sri Ambati explained how H2O clients use AI to save money. Due to audit automation, one of the top five audit companies managed to save $400M. National chains, including Walmart and Walgreens, use H2O to monitor changes in customer behavior due to the pandemic. H2O helped bank customers to avoid many billion dollar penalties, providing protection from fraud. Investment funds use AI to predict stock prices.

Financials and Valuation

In November 2021 H2O closed a Series E investment round, which was led by H2O strategic sponsor and client Commonwealth Bank of Australia (CBA). The company has raised $100M to fuel its growth. As a result, H2O was valued at $1.7B, which corresponds to a $28.63 price per share, and it is 4 times more since the last valuation at $400M in 2019. The previous round was also led by a strategic backer Goldman Sachs.

According to Crunchbase information, in November 2021 H2O raised $251M. Apart from its strategic partners, including NVIDIA and Wells Fargo, the company received investment from Barclays Investment Bank, Nexus Venture Partners and others.

Risks

High level of competition. Competitors include both major companies such as Amazon SageMaker, Azure Cognitive Services and Google Cloud AutoML, as well as startups such as DataRobot, Abacus.

Overestimation of the market. Machine learning platforms are a relatively young industry. There is a risk that analysts and venture investors overestimate its growth potential.

H2O has not published its financial and operational reports in open sources. So it's impossible to estimate the company's revenue dynamics and the profitability trends.

Low liquidity: investing in private companies at the pre-IPO stage is an opportunity to make money over a few years. If you exit early, the price may be significantly different from the purchase price or the selling process may take more than 1 month.