(Bloomberg) — The recent wave of artificial intelligence innovation has a dark side. Sure, AI models can write funny poetry and make videos, but there’s also the risk that the systems will produce a chatbot that says something wacky, untrue or potentially harmful — not to mention the possibilities of falling afoul of AI regulations.
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One small startup sees a market opportunity in that uncertainty. Credo AI is set to announce a $21 million funding round Tuesday for its work on risk and compliance issues around AI adoption. The funding round values the company at $101 million, about double its previous valuation it its last funding round in 2022.
Singapore-based venture capital firm CrimsoNox Capital is leading the deal, with participation from new investors Mozilla Ventures and FPV Ventures. Existing backers Sands Capital, Decibel VC, Booz Allen Hamilton and AI Fund are also joining the round, bringing the company’s total funding raised to $41.3 million.
Founded in 2020, Credo AI helps companies make sure that they’re following legal regulations and other standards around responsible AI use. The company — whose customers include Mastercard Inc., Northrop Grumman Corp. and Booz Allen Hamilton — says it has tripled its revenue and headcount in the past year, reflecting the demand from major companies to ensure they’re in compliance with new regulations such as the EU AI Act and the US AI Executive Order.
“The innovation in generative AI has really caused not only excitement around what AI can do, but also a little bit of a step back in thinking about, ‘How do we get this right?’” said Credo AI founder and Chief Executive Officer Navrina Singh, who added that inbound customer demand had recently increased, mainly from Fortune 2000 companies. Singh said that AI governance is the “boring but essential” work, particularly as companies invest more on AI capabilities.
Singh previously worked as a product director for Microsoft Corp. and Qualcomm Inc., and also has ties to the AI regulatory world. She serves on the Commerce Department’s National AI Advisory Committee, the Organization for Economic Cooperation and Development’s Expert Group on AI Risk and Accountability and the United Nations’ High-Level Advisory Body on Artificial Intelligence.
“The truth of the matter is that there’s far too many regulations and guidelines for a global enterprise to be able to follow on their own,” said Sands Capital managing partner Scott Frederick, one of the company’s investors. “In order to leverage AI, you’re going to need a governance platform that understands this regulatory lattice.”
In addition to a patchwork of national regulation in the form of laws and guidance from agencies like the US Federal Trade Commission, firms have to worry about developing state and local regulations as well.
Credo AI’s business gives companies an assessment about the risks of AI tools they’re using — Singh says the company currently tracks around 430 distinct types of risks — along with customized information on AI rules and regulations.
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