Investment Notes: Spice AI

We are pleased to have been part of the Seed round for Web3-focused data and AI infrastructure platform, Spice AI. The round was led by Madrona Ventures in Seattle and also featured Basis Set Ventures, Picus Capital, Protocol Labs, and strategic angels including Thomas Dohmke (CEO of GitHub), Nat Friedman (Chairman Github), Mark Russinovich (CTO Azure), and others.

‍

“AI-as-a-Service”

Spice is focused on helping developers integrate artificial intelligence (AI) into applications. Over the past decade, we have seen the emergence of “smart applications”, products that rely on real time data processed by machine learning models to deliver optimised user experiences. Think about how Uber uses data to optimise routing or Pinterest uses data to deliver an engaging browsing experience.

But while there has been tremendous progress in AI, actually integrating it into applications is still really hard. Companies need data engineers and building models takes time, quality data, and significant expertise. Founders Luke Kim and Phillip LeBlanc set out to attack this challenge, and you can read more about this vision in their Techcrunch launch article.

‍

“Snowflake + Github for Web3”

Spice has honed in on the first application for its broader platform - Spice XYZ. Spice XYZ will effectively become “Snowflake + Github for Web3” - a toolkit that supports developers to build intelligent applications on the foundations of Web3 data. 

Spice XYZ indexes live and historical blockchain and smart-contract datasets (Ethereum, Uniswap, etc) and enables developers to seamlessly tap into them through simple SQL.

While most blockchains are public, extracting data and building usable models is painfully difficult. Developers are forced to build and operate complex infrastructure including blockchain nodes, big data systems, ETL and ML pipelines, data lakes, data warehouses, and query systems and they need to deeply understand data sources across an expanding and changing array of blockchains, scaling layers, and dApps. 

Data and AI tooling has produced big winners in Web2 (Looker, Big Query, Power BI, Tableau, Databricks, Snowflake, etc) and given the richness of chain data, the opportunities for AI in Web3 are just as strong. Marketplaces want to make accurate user recommendations, investors want to identify investment opportunities, payment platforms want to protect against fraud and security risks. You can read more about the plans for Spice XYZ here.

An exciting market opportunity

Web3 is in its early innings. The market goes up and down, protocols come and go, and there are many points of friction to be resolved to make it more ubiquitous (scaling, gas fees, security, KYC and fraud, regulation and legal rights, scams, tax treatment, etc).

Spice is not making a bet on which blockchains, protocols, or applications will win, but rather simply that Web3, in whatever shape or form it may take in the future, will require underlying data and ML infrastructure.

The broader data opportunity in Web3 is great - as seen with the emergence of players such as Dune Analytics, Alchemy, Consensys (Infura), The Graph, Nansen, and others - and it is the space of real-time bulk data apis andr AI/ML capabilities where Spice XYZ intends to step in.

‍

An epic team

Co-founders Luke and Phillip are an awesome team. Luke grew up in Perth and out of high school spent time commercial pearl diving. He would dive by day and code by night, and experienced the sting of the infamous Irukandji jellyfish. He spent the last 11 years working at Microsoft on internal “0 to 1” projects within the Azure CTO’s incubation office. 

Their pace of execution and clarity of thought is truly spellbinding and their monthly product updates are a hit of dopamine. The company is HQ’ed in Seattle, but is building a fully global team with a strong and dedicated presence in Australia.

We are excited to be part of the Spice AI journey. If you’re equally interested in what Luke and the team are building - and especially if you’ve got a data or engineering background and passion for Web3 - then take a look at their job postings here.

‍

Tom, on behalf of Blackbird