AI Startup Hebbia Secures $130M Funding, Achieves $700M Valuation with $13M in Profitable Revenue

Hebbia, an innovative startup leveraging generative AI for document searching and complex question answering, has successfully raised $130 million in a Series B funding round, achieving an approximate valuation of $700 million. This round was led by renowned venture capital firm Andreessen Horowitz, with additional investments from Index Ventures, Google Ventures, and Peter Thiel.

The funding signifies a growing trend where a 50x annual recurring revenue (ARR) valuation is becoming the benchmark for AI startups, particularly those boasting early, substantial profits.

The official funding announcement echoed many earlier reports, though it revealed that Hebbia continued its fundraising efforts, securing an additional $30 million after our initial report. However, the company has not yet filed an updated disclosure regarding this round with the SEC; the latest available document indicates it was raising approximately $100 million in new equity.

Founded by George Sivulka during his PhD studies in electrical engineering at Stanford, Hebbia has achieved an ARR of $13 million and has maintained profitability while engaging with investors. According to informed sources, Sivulka, who serves as the startup’s sole founder and CEO, indicated in an interview that Hebbia’s revenue had surged 15 times over the past 18 months, although he refrained from disclosing specific financial details.

The current valuation reflects a robust investor perception, valuing Hebbia at around 54 times its ARR. Such substantial valuations were prevalent during the pandemic boom and are now becoming standard for highly sought-after AI startups. Comparatively, Hebbia’s peers, such as Glean and Harvey, are reported to have valuations slightly exceeding 60x ARR.

Established in 2020, Hebbia first focused on AI-driven search and summarization tools before transitioning to an AI analytics platform. The company's flagship product, Matrix, can process an unlimited number of extensive files and answer user queries in a structured tabular format. For instance, Matrix can analyze SEC filings and various documents to help users compare information about specific companies and their competitors.

Hebbia mainly caters to asset managers, investment banks, and other financial institutions, but it is also looking to broaden its reach into sectors like law and pharmaceuticals. Currently, 30% of asset managers utilize Hebbia’s software for due diligence, asset pricing, and market research. The new funding will be directed toward expanding its workforce, enhancing sales efforts in financial services, and diversifying into new industries.

Hebbia's client roster includes notable names such as investment bank Centerview Partners, Charlesbank, and the legal firm Fenwick.

Sivulka has gained recognition as a prodigy, having worked at NASA as a teenager and graduated from Stanford with a bachelor's degree in mathematics in just 2.5 years. Distinctively, he does not possess traditional business experience, nor does he have a co-founder with a business background, setting him apart from many other founders in the enterprise tech space.