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DataRobot acquires Algorithmia to further MLOps goal

DataRobot continues to pursue its growth-by- acquisition strategy by buying MLOps vendor Algorithmia in a bid to become a full-service machine learning platform provider.

DataRobot has acquired MLOps vendor Algorithmia, the latest in a string of acquisitions that has enabled the AI vendor to grow quickly in a crowded market and position itself as a full-service provider for enterprises looking to build machine learning models faster and at higher volume.

The vendor, based in Boston, also raised $300 million in a Series G round, bringing its market valuation to $6.3 billion ahead of a widely anticipated IPO.

DataRobot did not disclose the cost of the acquisition on July 27. Algorithmia has raised $31.1 million since it was founded in 2014, according to Crunchbase.

Productizing machine learning

The Algorithmia acquisition complements DataRobot's strong offerings in DataOps and other segments of the machine learning lifecycle and strengthens the vendor's ability to provide a platform that enterprises can use to automate the building of machine learning models at production scale and put models to use quickly, said Chirag Dekate, an analyst at Gartner.

"The space that DataRobot operates in -- the enterprise AI operationalization space -- is hyperactive and part of it is because enterprises are productizing AI like never before," Dekate said. "They want to take AI models and deploy them into production.

"To stay ahead of the curve, AI companies can either innovate on their own, acquire, or do all of the above," he continued. "In this case, DataRobot is doing all of the above."

DataRobot's growth has not come without stumbles, however. In March 2020, at the start of the COVID-19 pandemic, it laid off an unspecified number of employees.

Growth by acquisition

The latest DataRobot acquisition comes after the vendor bought Zepl, a smaller vendor specializing in cloud data science and analytics, in May. In June 2020, DataRobot acquired the Boston Consulting Group's AI technology, including source AI and modular development and deployment software.

That acquisition followed purchases of Cursor, a unified search and data collaboration tools provider, in February 2019; ParallelM, a startup vendor of a machine learning model management, deployment and monitoring platform, in June 2019; and data prep vendor Paxata in December 2019.

The combination of Algorithmia's model-serving and enterprise-grade security and governance capabilities alongside DataRobot's suite of model monitoring and management tools gives enterprise customers an operational platform to run any machine learning model, according to DataRobot.

Applications include compute-intensive deep learning for natural language and image processing in complex inference pipelines at scale on CPUs and GPUs, Data Robot said.

Algorithmia's MLOps platform is used by large enterprises such as Merck, EY, Deloitte and the United Nations, according to Algorithmia.

Fragmented market

DataRobot has elevated itself to a prominent position in the autoML market, which contains at least 70 startups focusing on different phases of machine learning model production, according to Dekate.

In addition, tech giants Google, Microsoft and AWS, all aim to boost machine learning model-making efficiency, speed and volume with more comprehensive platforms.

With its latest acquisition, along with the previous ones, DataRobot is seeking to provide enterprises with an "end-to-end" machine learning production system rather than a series of "point solutions," Dekate said.

"The combination enables enterprises to take data and put it into production and deploy models as fast as possible," Dekate said.

The funding round was led by return investors Altimeter Capital and Tiger Global, with new investors Counterpoint Global (Morgan Stanley), Franklin Templeton, ServiceNow Ventures and Sutter Hill Ventures.

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