AI company DeepHow lands $9 million VC haul

Sam Zheng, co-founder and CEO of DeepHow, said the added capital helps the company shift away from providing AI tools purely to larger enterprise clients and move down market toward the scores of smaller manufacturers seeking a solution to help with training their workforce.

“Previously we had to focus on large customers, because they’re a good validation of our product, and also they have deeper pockets and they can write a bigger check,” Zheng said during an interview this week. “But now — with more investment — we can serve a bigger market.”

In a news release, Zheng pointed to the hundreds of millions of manufacturing workers around the world and said DeepHow sees an “enormous opportunity to equip manufacturers globally with advanced and proven technology to help them up-skill and re-skill these workers.”

The company’s AI technology, called “Stephanie,” analyzes video of skilled workers performing various complex tasks, then identifies the steps and creates a step-by-step training video for the client to use.

Tom Kelly, executive director and CEO of Troy-based manufacturing trade group Automation Alley, said the technology is very much in demand as the much of the workforce ages toward retirement.

“The average age of a skilled trades worker in manufacturing is 59 years old,” said Kelly. “If you extrapolate out six years, half the workforce is going to be retiring, so they need a lot of training to get younger people into these roles. The way you’re going to do it is through engaging platforms that digital natives are comfortable working with.”

This latest round, which the company said was oversubscribed, was led by Silicon Valley venture firm Sierra Ventures, and had participation from Osage Venture Partners out of Philadelphia and San Diego-based Qualcomm Ventures. Existing investor Foothill Ventures also participated in the fundraising round.

A valuation for the company was not disclosed, but executives said DeepHow has over $1 million in annual recurring revenue and that number is expected to triple in the coming months.

“Sam and his experienced team at DeepHow have developed breakthrough technology that is already delivering a clear ROI in enterprise manufacturing settings,” Ben Yu, managing partner at Sierra Ventures, said in the release. “DeepHow is seeing strong market tailwinds due to the rapid changes in technology, an aging workforce, and the shortage of skilled workers in the global manufacturing and service industries. There’s a clear opportunity for the team to establish DeepHow as the leading knowledge capture and training platform for the manufacturing and service industries.”