Layer: Cost-Effective AI Copilots
Alumni Ventures portfolio company Layer presents an attractive AI software alternative for small and mid-sized businesses (SMBs). Layer allows companies to easily deploy and manage cost-effective AI copilots — next-gen chatbots that serve as dynamic virtual assistants. Layer’s copilots seamlessly integrate with complex web platforms, enhancing user experiences and streamlining web interfaces.
Enterprise Demand for AI Solutions
It’s difficult to overstate the potential benefits of AI for business, creative, and personal applications. According to PwC, AI could contribute up to $15.7 trillion to the global economy by 2030, “more than the current output of China and India combined.” Even just narrowing to Enterprise spending, the total is projected to surpass an astounding $300 billion by 2026.
However, the resources required to implement an AI platform have proven prohibitive for many small and mid-sized businesses (SMBs). Third-party AI software typically costs $40,000 a year, while a custom solution can cost as much as $300,000. For example, Microsoft’s 365 Copilot AI is only available to customers with 300+ users for $30 per month, per user — or $108,000 annually.
The Next Evolution of ChatGPT
AI copilots are considered the next evolution of chatbots. While popular chatbots like ChatGPT can respond to specific prompts, copilots are trained to serve as ongoing virtual assistants. A copilot is programmed with complete knowledge of a specific platform and designed to take actions on a user’s behalf.
Layer is creating AI copilots that are lower cost and easy to deploy on any web app. The company’s solution is driven by document object models (DOMs), which make web pages easier for programmers to navigate by organizing HTML in a structured hierarchy. DOMs are critical for collecting data from webpages to effectively train and test AI copilots.
Layer is building a framework that allows developers to build and deploy copilots autonomously. The company is initially focused on SMBs in the financial sector but envisions a future where software companies across sectors and sizes use Layer to build their own production-grade copilots at a fraction of the cost of doing it today.
What We Liked About This Opportunity
Driven, Entrepreneurial Founding Team
Layer’s co-founders have demonstrated a high level of grit early in their careers. CEO Jonah Katz and CTO Andrew Hamilton previously founded the sound detection platform Wav AI, which was selected for the Entrepreneurs Roundtable Accelerator in New York. They founded Layer after hearing fellow founders complain about unreliable and inaccessible AI copilot options.
Strong Customer Appetite for AI
Demand for enterprise AI solutions is robust and growing. Global spending on AI software, hardware, and services passed $100 billion in 2022 and is expected to triple in the next four years.
Conviction from Established Lead VC
Drive Capital is a stage-agnostic VC with $2.2 billion in AUM. The firm was founded by former Sequoia Capital partners Mark Kvamme and Chris Olsen to focus on startups outside of Silicon Valley. Drive has a reputation as a high-touch investor, a notable benefit for Layer’s young founding team.
How We’re Involved
Bascom Ventures (for the University of Wisconsin community) sponsored Alumni Ventures’ investment in Layer’s $3 million seed round in October 2023. Bascom had a natural connection with Co-Founder and CEO Jonah Katz, who studied at UW-Madison. Our ~50 investing professionals leverage their alumni connections, personal networks, and AV’s 600k+ member community to source promising investment opportunities.
Drive Capital led this seed round, with additional participation from Resolute Ventures, Detroit Venture Partners, and Expansion Venture Capital. AV sibling funds invested in the round include Bleecker Street Ventures (for the NYU community), Stadium Avenue Ventures (for the Purdue community), and AV’s AI Fund and Total Access Fund.
Alumni Ventures offers accredited individuals access to professional-grade venture capital , a key asset class missing from the portfolios of many sophisticated investors. Since 2014, AV has raised more than $1.2 billion across 40+ Alumni and Focused Funds, serving a growing network of 9,500+ investors and 600,000+ community members. AV evaluates hundreds of investment opportunities every year and has backed 1,200+ unique portfolio companies. Alumni Ventures is the #1 most active venture firm in the U.S., and #3 most active in the world, according to PitchBook’s 2022 rankings. AV funds are private, for-profit, and not affiliated with or sanctioned by any school. For more information, visit av.vc.