Austin Investor Sees Opportunity in City’s Cognitive Computing Niche

Manoj Saxena spent seven years at IBM Watson’s Austin headquarters leading its cognitive computing efforts. Now, at the helm of the Austin branch of The Entrepreneurs’ Fund, he hopes to use that expertise to help startups in an emerging realm of technology.

“The goal with Austin is to create a hub of cognitive computing companies,” Saxena says. “This is the next evolution of software.”

Cognitive computing involves using artificial intelligence and machine-learning techniques to build software systems that can “think,” adapt, and interact with people. One of the goals of the field is to help businesses make better sense of big data.

Saxena’s enthusiasm for the Texas capital’s potential comes from a number of reasons, starting with the fact that Austin is a key node for Watson, IBM’s big artificial intelligence effort. In January, the computing giant said it had formed a $100 million fund for startups that can work with Watson Developers Cloud.

Add to that Austin’s research prowess with the University of Texas at Austin, a startup ecosystem with entrepreneurs who excel in software development, and an infrastructure of investors, attorneys, and accountants, and Saxena says Austin is well suited to be home of what he calls a third wave of computing. For his part, Saxena is managing TEF’s fourth fund of $100 million that will be dedicated to early-stage cognitive computing endeavors. TEF is based in San Mateo, CA.

“I have never been this excited about technology since I saw Mosaic back in 1996,” he says. “There is a whole new class of end users who are born native on mobile devices. There is a tremendous amount of excitement as well as confusion from customers who want to exploit this.”

The fund recently announced an investment into Austin startup Cognitive Scale, which has created software that can mine databases and process natural language in order to present that data in an easy-to-understand format. Saxena did not provide an exact investment amount, saying the fund’s typical investment in a company would be in the $10-million range, and that TEF would always be the first money in.

Cognitive is the fourth Austin startup that TEF has invested in with this fund; the other two are based in California. “We’ve had 100 companies approach us in the last six months,” he says. “We were planning to only make four investments. We’re now not planning on making any investments until (next spring.)”

Saxena cites Deloitte numbers that say the cognitive computing market will grow from $1 billion today to $50 billion in 2018. That sort of growth comes with challenges, he admits.

“There will be a lot of walking dead in the big-data space in the next 18 months,” he says. “The category is technology heavy, not business heavy. It’s not just about building algorithms but the transformation of business applications, with this technology.”

 

Angela Shah is the editor of Xconomy Texas. She can be reached at ashah@xconomy.com or (214) 793-5763. Follow @angelashah

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