AI infrastructure cost control startup PointFive gets $60M to help enterprises save

FinOps startup PointFive Inc. said today it has raised $60 million from investors who are betting on its ability to help companies keep a lid on the spiralling costs of running artificial intelligence infrastructure.

Accel led the round and it was joined by venture capital firms including Index Ventures, Entre Capital, Perpetual Growth, Vesey Ventures, Sheva Ventures and Salesforce Ventures.

New York-based PointFive has created what it calls an “AI and cloud efficiency platform” that allows businesses to visualize, control and optimize the costs associated with cloud-based computing infrastructure. The round brings its total amount raised to date to $96 million and its validation to $500 million, exactly half way to unicorn status.

The name “PointFive” reflects the company’s claim that it can help its customers to slash their cloud spending bills by half. It does this by scanning the cloud environments they use to uncover any wasteful spending on things such as idle servers, unused storage resources and so on.

It’s particularly focused on AI infrastructure, where many organizations waste a lot of money on memory resources, it says. Many businesses will try to make sure they have ample context available for their AI models to ensure they can respond accurately. But if an AI model has too much context, it can cause problems such as slower response times and ballooning costs.

AI agents that are “always-on” are another massive drain on finances, PointFive Chief Executive Aron Arvatz (pictured, center) told the Wall Street Journal.

PointFive’s platform integrates with customer’s cloud environments and runs behind the scenes, helping to guide cloud engineers. It will scan their complete infrastructure setup and then make recommendations on how to optimize it, so they can lower their costs without impacting performance, Arvatz explained. For instance, it might suggest that a customer uses a lower cost AI model in some applications, depending on the nature of the task. “We’re their efficiency coach,” he explained, adding that some larger companies spend millions of dollars annually on unnecessary resources.

Accel partner Philippe Botteri told the Journal that the cost of running AI applications has become one of the largest expenses for many organizations. They’re facing mounting bills for their use of compute, networking and storage resources as a result of pushing their employees to adopt AI tools to get more work done. This practice, which Botteri calls “tokenmaxxing,” rapidly drives up costs as companies eat up tokens, which are the units that track consumption of AI resources.

One of the biggest companies to learn this the hard way appears to have been Meta Platforms Inc. In a widely publicized memo to Meta employees in April, the company’s Chief Technology Officer Andrew Bosworth ordered that “nobody should be using AI tools just for the sake of using them. All motion is not progress and token usage alone is not a measure of impact of any kind.”

Arvatz founded PointFive back in 2023 along with cybersecurity veterans Gal Ben David (left) and Amir Hozez (right). They previously co-founded and sold a company called IntSights Cyber Intelligence Ltd., which was acquired by Rapid7 Inc. for around $335 million in 2021. It was during the time when InSights’ technology was being integrated with Rapid7’s that they realized the scale of its wasted cloud spending.

The startup says its services are getting a lot of traction. Although it didn’t provide any numbers, it said its annual recurring revenue increased by six times in the last year, with much of that driven by existing customers who doubled their spending, on average. They’re spending more money to save more money, Arvatz said, and he believes the company is on track to increase its revenue by fivefold this year.

Those customers include global enterprises such as the German utility firm E.ON GmbH, the Brazilian neobank Nubank, and U.S.-based Fanatics Inc., which sells sports merchandise, collectibles and runs gambling platforms. According to Arvatz, Nubank was able to recoup the money spent on his company’s services within just 10 days thanks to the reductions in cloud infrastructure costs.

Arvatz said the company will use the money from today’s round to expand its operations into Europe and Israel. It will also grow its staff, with plans to add about 40 new employees to its marketing and research and development teams this year. However, it had originally sought to hire up to 80 new workers, only to scale back those plans as a result of employing its own AI. “Our own use of AI is allowing us to avoid the issue that many companies are facing currently: having to ‘right-size’ after overly aggressive hiring,” Arvatz explained.

The startup is also planning to launch new services this year, such as TokenShift, which debuted today and helps customers with tracking and controlling their internal AI tool usage.

Featured photo: Eyal Marilus