Yahoo Spin-Out Vespa Secures $31M Investment from Blossom Capital

Vespa.ai, the big data serving engine that recently became an independent venture after spinning out from Yahoo, has successfully raised a new round of funding. Blossom Capital has led a $31 million investment in Vespa, aimed at expanding the company as a standalone entity. According to Vespa CEO Jon Bratseth, these funds will enhance engineering capabilities and enable the company to deliver new features more rapidly to users.

“In particular, we’ll accelerate the development of features that make it easier for developers to create applications integrating AI models with proprietary datasets,” Bratseth shared in an email interview. “Vespa has a rich history of over 20 years, and we are positioning ourselves for long-term growth.”

Vespa was originally created in 2005 after Yahoo acquired the paid search service provider Overture along with the Norwegian search engine AlltheWeb.com. Working with Yahoo’s e-commerce division, the AlltheWeb team adapted their search technology into a versatile tool that Yahoo developers could utilize to process large datasets in real-time.

Over the past decade, Yahoo has enriched Vespa, enabling it to process various types of input beyond text strings, tailor content based on user interactions, and respond to machine learning algorithms. In 2017, Yahoo made the strategic decision to open-source Vespa, aiming to foster a supportive developer community and create a vibrant ecosystem around the software.

This strategy has proven successful. Today, thousands of brands, including Spotify, OkCupid, and Wix, leverage either the open-source version of Vespa or its cloud-hosted, fully managed product, Vespa Cloud. The technology continues to power searches and related-article recommendations across many Yahoo-owned platforms, facilitating ad targeting for popular web properties such as Yahoo Sports, Yahoo Finance, and Yahoo News.

“Well-known applications of Vespa include search functionalities for both humans and AI, online personalization recommendations, and ad serving,” Bratseth explained. “Vespa effectively applies AI to ingest, analyze, and utilize data to address various needs, ranging from assisting a global financial services provider in instantly searching billions of documents to serving one billion users by processing 800,000 queries per second across 150 applications for content delivery and targeted advertising on Yahoo.”

While there are several open-source competitors like Solr and Elasticsearch, Bratseth argues that Vespa offers unique advantages in the market. For instance, he highlights that Vespa’s “vector streaming search” feature can significantly reduce costs associated with retrieving personal data such as emails and documents.

“Vespa provides end-to-end services that empower clients to utilize any mix of text and structured data, delivering high-quality results with sophisticated scoring and relevance at scale,” Bratseth stated. “Vespa addresses challenges faced by various AI applications, including large language models like ChatGPT, as they scale up user bases and data requirements while enabling Fortune 500 companies to harness AI for operational efficiency and improved profitability.”

Now free from direct Yahoo influence, aside from its stake and a board member, Bratseth notes that Vespa’s team has grown to 29 members and is primed for further cloud service expansion. “Current Vespa users can now transition to Vespa Cloud,” he mentioned. “As a startup, we see incredible growth potential stemming from our robust open-source enterprise usage, which would greatly benefit from our managed platform’s capabilities.”