S&P Global is set to acquire its portfolio company Kensho, a spinout from Harvard and MIT, in the largest such deal involving an AI developer to date.
Kensho Technologies, a US-based artificial intelligence spinout from Harvard University and Massachusetts Institute of Technology (MIT), yesterday agreed to an acquisition by financial services provider S&P Global for approximately $550m.
S&P Global will pay the $550m in a mix of stock and cash, making it the highest price paid for an artificial intelligence company to date, according to news publication Forbes.
The deal is subject to regulatory approval and customary closing conditions, and is set to conclude either late this quarter or early in the second quarter of the year.
Founded in 2013, Kensho has developed an artificial intelligence platform that enables users to ask questions about complex problems in plain English and obtain answers within seconds, rather than having a human analyst comb through data for several hours or days.
The platform accurately predicted, for example, that the UK’s decision to leave the EU would lead to an extended drop in the British pound’s value even as markets rallied after the initial crash. Kensho’s algorithm achieved this by analysing historical, populist votes within seconds.
Kensho has developed three products based on the technology – a first one aimed at financial analytics, a second one for socio-economic analytics, including areas such as healthcare, and a third one for national security.
The spinout was co-founded by Daniel Nadler, who obtained his PhD from Harvard University, and Pete Kruskall, who gained a Master of Engineering from MIT. Nadler acted as chief executive of Kensho, while Kruskall served as chief technology officer.
Nadler will remain at the helm of Kensho, which will stay an independent brand, and report to S&P Global’s chief financial officer Ewout Steenbergen.
The acquisition is expected to improve the efficiency of S&P Global’s own core internal operations and enable its clients to gain more actionable insights.
Kensho previously obtained $50m in a series B round in February 2017 led by S&P Global, with participation from financial services firms Goldman Sachs, JPMorgan Chase, Bank of America Merrill Lynch, Morgan Stanley, Citigroup and Wells Fargo.
The spinout had already disclosed $47.8m in a regulatory filing in 2015 but did not name any investors at the time. The series B round reportedly valued Kensho at $500m.
Goldman Sachs previously led a $15m series A round in November 2014, after GV, the early-stage corporate venturing arm of diversified conglomerate Alphabet, had taken part in a $10m seed round in January 2014.
The seed round also included financial services conglomerate Fidelity Investments’ F-Prime Capital subsidiary, then known as Devonshire Investors, and VC firms New Enterprise Associates, Accel and General Catalyst Partners.
