(Bloomberg) — Snowflake Inc., according to people familiar with the matter. The startup is in talks to acquire Reka AI for more than $1 billion, boosting the software maker's push to offer creative AI capabilities.
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Reka AI builds large language models – software trained on the Internet at scale that can be used for many tasks, such as captioning images or as customer support chatbots. The startup was founded in 2022 by researchers from Alphabet Inc. Google and MetaPlatforms Inc. It was valued at about $300 million in a 2023 investment round, which included funding from Snowflake's venture arm, Reuters reported.
Snowflake builds tools to manage and analyze data in the cloud and looks to creative AI, which produces text, sound or images in response to user cues, to accelerate its business. It released its large language model Arctic in April. The company lets users use third-party AI models, such as Reka's, on their data within Snowflake.
The talks may not result in a deal, according to the people, who asked not to be identified because the talks are private. A spokesman for Snowflake declined to comment. Rika could not be reached for comment.
Sridhar Ramaswamy, who had a decade-and-a-half tenure at Google, took the reins as Snowflake's chief executive officer earlier this year. Ramaswamy was Senior Vice President of AI at Snowflake before becoming CEO. He joined the company last year when it acquired AI-powered search engine Neeva.
Shares of Snowflake are down 17% this year, trailing iShares' Broadest Tech-Software Sector ETF, which has gained 3.3%. The company's revenue growth slowed in 2023 after many businesses cut back on their software purchases. This trend, called cost optimization, has led Amazon.com Inc. And also affected cloud providers like Microsoft Corp.
Technology companies have reached out to partner or acquire startups working in the competitive field of generative AI. Microsoft has bankrolled OpenAI's efforts and recently hired most of Inflection AI's staff. Qualcomm Inc. The semiconductor startup is teaming up with Ampere to work on AI-based chips. Salesforce Inc. has invested in a number of AI startups as it integrates the technology through its customer-centric apps.
Databricks, a startup commonly seen as Snowflake's main competitor, has also released its own open-source big language model and last year acquired AI startup MosaicML for $1.3 billion. Databricks was valued at $43 billion in September, compared to Snowflake's current market value of about $55 billion.
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