November 9, 2015

H2O Raises $20 Million to Scale Machine Learning Biz

Alex Woodie

In yet another sign of the rise of machine learning, H2O.ai today announced the close of a $20 million series B round of funding, bringing its total funding to $34 million, and giving it additional capital to grow its sales, marketing, and customer support operations.

H2O (which changed its name from 0xdata last year) is one of a number of software companies aiming to simplify how customers use machine learning technology. The company counts 5,000 customers, including Cisco, which uses H2O software to run 60,000 propensity-to-buy models every quarter, and Progressive, which employs H2O models in its Snapshot driving data collector.

Data scientists have been using machine learning algorithms for years to identify patterns buried in huge data sets. But with the data scientist shortage showing no signs of abating, you can expect to see more user-friendly tools that allow mere mortals to benefit from ML-driven insight.

H2O CEO and co-founder Sri Ambati, who earlier told Datanmi that “machine learning is the new SQL,” says we’ve reached the point where algorithms can transform every business.

“This funding will support the explosive growth in our customer community and the application developer ecosystem in key verticals emerging from the open source platform,” Ambati says in a statement. “We’ll further simplify the use of machine learning to transform rule-based software to real-time learning-based smart applications.”H2O Logo_1

Over the past year, the Mountain View, California-based company has signed 25 new paying customers, including blue chip names like AT&T, Comcast, Kaiser Permanente, McKesson, Walgreens, Capital One, Progressive, Transamerica Corporation, and Zurich Insurance Group.

The company says it’s seen a 300 percent increase in downloads for its software, including Stream and the Apache Spark-based Sparkling Water. Both products are free and open source. The company also claims that more than 10 percent of the world’s data scientists now use H2O software.

The $20 million funding round was led by Paxion Capital Partners, and included existing investors Nexus Venture Partners and Transamerica Corporation, as well as a new participant, Capital One Growth Ventures joining.

Michael Marks, the founding partner of Paxion and Walden Riverwood Capital, will join H2O’s board of directors. “I’d be shocked if every company in the world wouldn’t benefit from using H2O,” said Marks, who has been involved with companies like Flextronics and Zappos.

Lauren Connolley, a venture partner at Capital One Growth Ventures, says her firm decided to invest in H2O after first becoming a customer. “We were quickly impressed with H2O’s power to operationalize data science and the critical role H2O plays as a bridge between data science and application development,” Connolley says.

H2O is holding its annual user conference this week at the Computer History Museum in Mountain View. The company expects about 700 attendees from more than 50 organizations to attend the three-day H2O World 2015 event.

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