Articul8, an enterprise AI company spun out of Intel in early 2024, has secured more than half of a planned $70 million funding round at a $500 million pre-money valuation, according to its CEO, as it looks to capitalize on growing demand for AI systems in regulated industries.

The Series B funding round is structured in two installments, with the first led by Spain’s Adara Ventures, Articul8 founder and CEO Arun K. Subramaniyan (pictured above, center) said in an interview. He declined to disclose the size of the initial installment, but said the company expects to close the round in the first quarter of this year.

Articul8’s valuation for its current funding round marks a roughly fivefold increase from the company’s $100 million post-money Series A valuation in January 2024. Since then, the Santa Clara-based company said it has surpassed $90 million in total contract value — the cumulative value of all signed customer contracts — from 29 paying customers, including Hitachi Energy, AWS, Franklin Templeton, and Intel.

Subramaniyan told TechCrunch that Articul8 was not under pressure to raise capital, describing the company as revenue-positive following a series of large enterprise contracts.

“We are not cash-strapped,” he said.

The company expects to finish the year with annual recurring revenue of just over $57 million, Subramaniyan said, with roughly 45% to 50% of that already recognized.

Articul8 develops specialized AI systems that operate within customers’ own IT environments, rather than relying on shared, general-purpose models. Instead of selling standalone models, the company packages its technology as software applications and AI agents tailored to specific business functions, targeting regulated industries such as energy, manufacturing, aerospace, financial services, and semiconductors, where accuracy, auditability, and data control are critical.

“Our competition is pretty much everybody,” said Subramaniyan. “But today, the major competitors are the cloud service providers, because they have realized that their model, as the general-purpose [offerings], are all commodities.”

He added that Articul8’s focus on specialized systems appeals to customers who need predictable results and clear audit trails, something that is harder to achieve with general-purpose models run on shared cloud platforms.

Articul8 plans to use the Series B proceeds primarily to expand research and product development and to scale its operations internationally, with a focus on Europe and parts of Asia.

Adara Ventures’ participation will help speed-up the European expansion plan, as the European Investment Fund backs the Madrid-based VC firm’s energy fund, Subramaniyan said. The company is also looking to scale in markets including Japan and South Korea, where it has begun working with large enterprise customers, he noted.

India’s Aditya Birla Ventures also participated in the ongoing round, Subramaniyan stated.

Articul8 works with large tech groups including Nvidia and Google Cloud, Subramaniyan said, adding that Amazon Web Services is both a customer and a partner for the company on some deployments.

The company employs 75 people, with about 80% focused on R&D, and teams spread across the U.S., Brazil, and India.