IBM Acquires AI Startup AlchemyAPI to Strengthen Watson

IBM’s Watson, already one of the world’s smartest supercomputers, might be getting smarter following IBM’s purchase of AlchemyAPI, a Denver-based artificial intelligence startup that specializes in deep learning, an area of machine learning focused on making sense of data.

AlchemyAPI and IBM announced the deal Wednesday. They did not disclose the purchase price.

The acquisition means AlchemyAPI’s team of 18 will join IBM’s Watson group, founder and CEO Elliot Turner said. IBM also will gain the cognitive computing technology AlchemyAPI has developed over the past decade and the 40,000 developers who use it, according to a release.

AlchemyAPI has been described as “cognitive computing or artificial intelligence as a service,” and its cloud-based software can be used to analyze text, images, and large unstructured sets of data, Turner said. From that, it can perform sentiment analysis, keyword extraction, tag images, and identify faces.

While those capabilities are useful, AlchemyAPI has been more interested in what it takes to get computers to teach themselves with minimal help from humans.

“Alchemy’s spent a lot of time building out deep learning capacities to ultimately enable computers to start to learn more effectively directly from the data itself,” Turner said.

In his view, computers are very good at math, but when it comes to understanding how humans communicate with each other, they struggle to do what most toddlers can do.

One of AlchemyAPI’s goals is to ultimately enable computers to create knowledge graphs that allow them to “read documents in a very human-like way, not just looking at words but getting to the core meaning of what’s said and extracting out factual information and making connections between things in the world,” he said.

That’s one of the Holy Grails of AI research, of course, and IBM has been pursuing similar goals with its Watson program. Turner described the deal as a pairing of companies with complementary philosophies and products.

“Bringing these two companies together is not so much about filling gaps. It’s really piling more technologies on to the heap to allow for greater and greater effect,” he said.

IBM said it will integrate AlchemyAPI’s software into its core Watson product and improve the system’s ability to quickly identify hierarchies and understand relationships within large-volume data sets. It also will make Alchemy’s APIs (application programming interfaces) available to its network of clients and developers.

Turner founded AlchemyAPI in 2005 and spent the first few years just doing research and development. He initially financed the company using money he made from selling his first startup. In 2013 AlchemyAPI raised a $2 million Series A round from Access Venture Partners, a Denver-area venture capital firm.

The company has been generating revenue since it emerged from stealth in 2009, which enabled it to minimize its dependence on investors and control its own destiny, Turner said. Its customers span companies working in retail, finance, and travel, and they include Pocket, Hearst, and Shutterstock. According to a release, AlchemyAPI software processes billions of API calls per month from 36 countries and in eight different languages.

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