Editor’s note: This article is part of an ongoing series in which Crunchbase News interviews active investors in artificial intelligence. Read previous interviews with Foundation Capital, GV (formerly Google Ventures), Felicis, Battery Ventures, Bain Capital Ventures, Menlo Ventures, Scale Venture Partners, Costanoa, Citi Ventures, Sierra Ventures, Andrew Ng of AI Fund, and True Ventures, as well as highlights from more interviews done in 2023.
Fueled by AI, both Dell and its investment arm are on a hot streak this year.
The PC maker has seen demand for its server products surge with $20 billion in AI server shipments projected for fiscal 2026. At the same time, its investment arm, Dell Technologies Capital (DTC), has notched five exits — an IPO and four acquisitions — since June, an especially notable track record in a venture industry that has been challenged in recent years by a liquidity crunch.
On the heels of that success, we recently spoke with Dell Technologies Capital managing director Daniel Docter and partner Elana Lian.
DTC was founded more than a decade ago and operates as a full-stack investor, backing everything from silicon to applications.
“One big part of our network is the Dell relationship, which is the leader in GPU servers,” said Docter. As a result, Dell is connected to all the major players in the AI space, he said.
One of its earliest AI investments was during the machine-learning era in 2014 in a company called Moogsoft. Dell went on to acquire the alert remediation company in 2023.
DTC’s investment thesis was that the advent of machine learning was going to disrupt the tech industry. At that time, data had expanded to such a degree that new tools were required by the market to analyze data and find patterns, which informed the firm’s early investments in AI.
The investment team at DTC is largely comprised of technical people, often “double E” degree engineers.
Docter has an electrical engineering background, worked at Hughes Research Labs, now HRL Laboratories, and transitioned from engineering to business development. He joined the venture industry 25 years ago and spent more than a decade at Intel. He joined DTC in 2016 through Dell’s EMC acquisition.
Lian worked in semiconductors for a decade, joined Intel Capital in 2010, and then joined Dell Technologies Capital in 2024.
Data evolution
Docter believes we are in the fifth generation of AI, which becomes more powerful with every iteration.
“We’re seeing that AI is almost a data problem,” said Lian. “For AI to get better and better, there’s an uncapped ceiling where there’s high-quality data coming in.”
The team is meeting startups focused on training, inference, reasoning and continuous learning along with safety requirements. Data is core to these advancements.
Even the definition of data is changing. “It used to be a word, then it was a context, then it was a task or a rationale or a path. Then it’s reasoning,” said Docter. “Who knows what’s next?”
As AI improves, there is demand for frontier data and for specialized data in fields such as philosophy, physics, chemistry and business. Humans are in the loop as these capabilities expand, said Docter, which has informed some of the firm’s investments.
On deal flow
DTC is a financial investor, assessing a potential company on whether it is a good investment, rather than backing businesses based on Dell’s strategic goals.
Startup revenue is exceeding what was previously possible, Docter said: “I’ve been doing this for 25 years. I’ve never seen companies that have this type of revenue growth.”
The best deals are always hotly contested, he noted.
The question to ask when it comes to revenue, Docter said, is: “Is that an innovation CTO office budget? Or is that a VP of engineering budget?”
When assessing a potential portfolio investment the team asks: “Is revenue durable? Is there value in using this?”
The pace of investment also seems unprecedented. “We’ll meet with a company on a Tuesday for the first time and sometimes by Thursday, they have a term sheet that they’ve already signed,” he said.
The firm does not have a dedicated fund size, which is an advantage as it can be flexible in the size of the check as well as the stage to make a commitment and how it invests over time.
DTC has invested $1.8 billion to date across 165 companies. It likes to invest early, at seed or Series A, with check sizes running from $2 million to $12 million, and leads or co-leads 80% of new deals. The firm makes around 15 to 16 new investments per year.
Once DTC has invested, it looks at how the firm can help portfolio companies sell to potential customers across Dell’s deal partner network.
This year, DTC has posted five exits, including Netskope’s IPO and four acquisitions: Rivos by Meta, SingleStore by Vector Capital, TheLoops by Industrial & Financial Systems and Regrello by Salesforce 1.
Notable AI investments
DTC is investing a little more actively than it has in the past, but remains disciplined, Docter said. The investment team is focused on complex enterprise use cases and challenges, following the Warren Buffett rule, which is to invest in what you know.
The firm invests at the silicon level because you “can be incredibly disruptive to the ecosystem,” said Docter.
The DTC portfolio companies we discussed include the following in areas ranging from silicon to applications.
Infrastructure and hardware layer:
- AI chipmaker Rivos, which Meta plans to acquire for an undisclosed amount. (The deal is pending regulatory approval.)
- SiMa.ai, which makes a chip for embedded edge use cases including in automobile, drone and robot technologies.
- Runpod, an AI developer software layer with on-demand access to GPUs. It allows developers to play with AI and then scale it to production. The service has 500,000 developers, including 30,000 paying monthly, said Docter.
- SuperAnnotate, a data annotation platform for enterprises with humans in the loop to build accurate data pipelines. Its customers include Databricks and the women’s health app Flo Health.
Applications:
- Maven AGI provides customer support for complex and high-compliance enterprise use cases, a potentially massive market. Lian projects customer experience overall will be a trillion-dollar market.
- Series Entertainment, a GenAI platform for game development that aims to reduce deployment timelines from eight months to two weeks.
What’s next?
A major area of interest for Lian is advancements in voice AI, the day-to-day human interaction with a machine.
It’s hard to imagine that the transformer architecture is the last and final architecture, said Docter. The firm has made investments in companies creating different architectures in Cartesia, a leader in state-space model, which has a longer context window building a new reasoning model with a different architecture, initially focused on voice AI. DTC has also invested in Israeli-based AA-I Technologies, which is working on a new type of reasoning model architecture.
“Right now, the opportunity of AI is this big, but this ball keeps on exploding,” said Lian. “The contact area is getting bigger and bigger. And that’s the same for the data.”
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Illustration: Dom Guzman
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