Key Stats: SapientX on Wefunder
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Artificial intelligence (AI) and voice recognition were expected to make the next frontier of futuristic technology. Silicon Valley insiders and regular consumers alike have been intensely curious about AI-enabled assistants for years. A simple Google search of “hype” and “AI” uncovers hundreds of articles dissecting the explosion of interest and speculating whether that interest is deserved.
Indeed, many are beginning to wonder whether AI and voice recognition actually live up to the hype. While almost 150 million smart speakers were sold in 2019, they don’t have a particularly loyal customer base. About a third of smart speaker owners use them less after the first month. A full half are willing to go back to life without a smart speaker. Many consumers have discovered that smart speakers are only advanced enough to help with limited tasks like music and weather. They’re far from the transformative digital assistant that’s been promised.
However, efficacy is not the biggest issue with smart speakers. Amazon Alexa and Google Home have entered our personal spaces. We know that they’re always listening. Concerns about privacy have skyrocketed alongside the sales of smart speakers. Consumers are increasingly concerned that their voice data is being stored and exploited by big tech companies like Amazon, Google, and Facebook. It also doesn’t help that trust in big tech is declining, driven in part by artificial intelligence projects.
It feels as though we’re in an inflection point with artificially-intelligent assistants. The intense novelty of tech that talks back is fading. Consumers increasingly demand better privacy guarantees and more useful functionality. If big tech companies can’t provide the answer, who can?
SapientX is an AI challenger offering more effective and more private smart assistants. SapientX partners with a wide variety of companies to integrate artificially-intelligent voice recognition technology into their consumer products.
SapientX was founded by technologists who have been working in AI and voice recognition for decades. While the company’s core voice technology was performing well as early as 2009, the team waited for voice recognition capabilities to catch up. SapientX was founded in 2016 and began developing partnerships with industry leaders in cars, appliances, and more.
SapientX essentially creates branded smart assistants specific to each partner. For example, SapientX’s “Mia” assistant will be launching inside Mitsubishi’s Outlander SUVs. SapientX’s Telecaster assistant system is adding artificially-intelligent capabilities to teleconferencing services like Zoom and WebEx.
These assistants are similar to the typical smart speaker in that they recognize voice commands and perform actions to aid the consumer. However, SapientX’s technology is distinct in its effectiveness. SapientX assistants have 99% conversational understanding accuracy, compared to just 73-75% for Siri and Alexa. SapientX supports AI-backed conversations in 40 languages and dialects. Importantly, SapientX also distinguishes itself from tech giants in that its assistants can function offline and store data locally on users’ devices. This offline capability eliminates the privacy risk inherent to online server storage of voice conversations.
SapientX has gained traction with many leading consumer firms. The company’s assistants are in pre-production development with Volvo, Mitsubishi, Yamaha, Samsung, and KTM. Other partners in the pipeline include LG, GE, and Haier. Ultimately, SapientX intends to become the AI assistant supplier for every major brand of cars, appliances, and other major electronic systems present in consumers’ homes.
SapientX monetizes according to the norms of its industry partners. For automotive contracts, SapientX performs paid or unpaid prototyping and user testing and hopes to ultimately win per-unit software sales, often ranging between $10-$20 per vehicle. Thus far, SapientX has generated little revenue: $41,000 in 2019, with a net operating loss of over $250,000.
SapientX was co-founded by three friends, David Colleen, Maclen Marvit, and Bruce Wilcox. Colleen, SapientX’s CEO and Chairman of the Board, is an AI and virtual reality entrepreneur that launched the first VR on the internet. He has worked with 17 Fortune 100 companies to build various software products.
Marvit is SapientX’s CTO and has experience in rocket science from NASA and Blue Origin. He has almost 30 years of experience in engineering and technology. Most recently he co-founded a company that was 96% effective in finding and killing mosquitoes by using lasers, machine learning, and artificial intelligence.
Wilcox is a SapientX founder and part-time employee/advisor. He has 40 years of focused experience in engineering artificial intelligence technology and previously worked at Amazon. Notably, Wilcox has won the prestigious Loebner Prize for artificial intelligence four times for best conversational AI.
SapientX has many key milestones on the roadmap for 2020. The company intends to embed SapientX software into Android for starters. They also plan to integrate with Unity (a top gaming platform) and create a non-technical assistant builder in partnership with RayGun Studio. Most importantly, SapientX assistants are planned to ship to consumers for the first time in late 2020.
The company notes that its biggest risk is undercapitalization. COVID-19 has caused supply chain delays that impact the capability of SapientX’s partners to ship products, which delays an infusion of cash for SapientX. The current fundraise is likely meant to ameliorate that undercapitalization so SapientX can continue sprinting toward milestones on the roadmap.
SapientX is clearly aiming toward acquisition and notes several times that peers in AI conversational platform development have enjoyed large exits. SapientX believes that acquisition from a larger company is the necessary path to introducing its AI product to as many users as possible.
Why We Like it
- Traction with market leaders in cars and appliances: SapientX will be launched across the globe in Mitsubishi Outlander SUVs later this year. A launch of that scale with a globally-recognized brand is a major success for any early-stage company. Mitsubishi is only the beginning. SapientX has also begun pre-production development with companies like Volvo and Samsung. By all evidence, SapientX technology is impressive and attractive for major brands worldwide. This traction should soon lead to significant revenue and further partnerships that will allow the company to scale even further.
- Deeply experienced team: SapientX is led by a team of seasoned technologists and entrepreneurs, including an award-winning expert in conversational artificial intelligence. With almost 100 years of combined experience in cutting-edge technology entrepreneurship and advanced AI engineering, it’s no surprise that SapientX has secured partnerships with the likes of Mitsubishi and Samsung.
- Lucrative exit potential: SapientX has already gained significant traction in partnering with leading consumer companies, despite its lack of realized revenue. The technological strength of SapientX’s product, combined with hopeful success of these partnerships when they go to market in late 2020, could make SapientX an attractive target for acquisition. Moreover, co-founder Bruce Wilcox’s previous company, Outfit 7, enjoyed a $1 billion exit relying on SapientX’s same core technology, which is a strong signal that the tech is strong enough to withstand through due diligence from prospective acquirerers.
SapientX is well on the way to powering conversational AI in many consumers’ cars and major appliances. They have a deeply experienced team, partnerships with many leading consumer brands, and potential for a lucrative exit. SapientX is well-positioned to deliver a successful return for investors.
SapientX obviously competes with behemoth players like Amazon, Apple, Google, and Facebook. SapientX believes that its conversational AI platform is superior to those competitors because it is more effective at recognizing voice commands, offers better privacy through local data storage, and is focused on productive conversations with users (instead of harvesting and exploiting data). All of these points seem to be correct. Additionally, the AI market is so large that there is certainly space for an up-and-coming competitor. However, any company competing with companies in the FAANG set runs the risk of meltdown if one of those giants aggressively pursues similar contracts.
That being said, Amazon, Apple, Google, and Facebook are perhaps SapientX’s most likely acquirers. Registering on their radars may ultimately create significant success rather than failure. Big tech companies have aggressively acquired many artificial intelligence companies in recent years. In fact, Apple and peers have purchased over 60 AI startups in the last ten years alone. SapientX has extremely strong exit potential. A company relying on SapientX’s core technology was already acquired for over $1 billion. (This fact raises questions about SapientX’s ownership of its core technology. The company reports that it has developed and owns its full tech stack, and that Outfit 7 previously, but no longer, used portions of similar code thanks to its relationship with SapientX co-founder Bruce Wilcox. The complexity of this scenario should raise a small red flag for prospective investors.)
SapientX offers an effective and privacy-focused improvement over existing conversational AI products just as consumers are beginning to demand more from their smart assistants. While SapientX’s long-term success hinges on the launch of partners’ products later this year and beyond, evidence indicates that it has the technological expertise and industry relationships to continue winning large contracts. Therefore, SapientX is a Deal to Watch.
About: Katy dolan
Katy is a marketing and research consultant to startups (including VC-backed companies, small businesses, and advocacy movements). With experience in tech, venture capital, politics, and non-profits, Katy partners with clients to strategize and execute compelling campaigns focused on user experience and empathetic narrative. Katy graduated cum laude from Harvard College with an AB in Sociology.