Visual AI is the Next Frontier

The potential applications for AI are limitless. It’s no longer just a tool for high tech industries, though we know all about that. Just look at how it’s made its way into the mainstream. And the next big opportunity in the application of AI is visual. About 90% of data is unstructured, and much of it is visual content, like images and videos.

Andrew Ng and Landing AI are leading the charge. Again. Is anyone surprised?

We’re not – that’s why we’ve partnered with Snowflake Ventures to further invest growth capital in our portfolio company Landing AI’s computer vision capabilities. This significant partnership will enable customers to leverage Landing AI’s capabilities natively on Snowflake via Snowpark Container Services and Snowflake Native Apps to create powerful, customer-built computer vision solutions that process images and videos at scale, all within the secure, governed boundary of the data cloud.

Landing AI sees the value in using large vision models (LVMs) to process and interpret the terabytes of visual data generated every year. And we see the value their intuitive software platform brings to enterprises that leverage generative AI technology for computer vision to innovate.

Think quality inspection, robotic assembly, and defect detection in manufacturing. Drug discovery, medication inspection, and cell analysis in the pharma industry. Automated checkouts and shelf inventory checks in retail. And that’s just for starters.

We can’t wait to see what’s next for this powerful partnership!

We’ve got big news! Today we are launching the McRock Industrial Software Index—a one-of-a-kind industry tool to track the performance of companies providing software-powered solutions to industrial sectors. Surprised?

You were probably expecting to hear about another big deal closing. Or a new company we’ve added to our portfolio. While that work never stops at McRock, we’ve also been busy watching the landscape for important trends, especially the ones that reveal the greatest opportunities for value creation. If you didn’t already know it, Industrial Software is the place to be, now more than ever before. (We wrote about it the other day.) And we believe the Index will confirm it.

The Industrial Software space is a vibrant arena characterized by a dynamic interplay of competition and collaboration among various players. Notably, established Industrial Software Providers and Emerging Tech Companies play pivotal roles in shaping this landscape. The McRock Industrial Software Index focuses on publicly listed companies within these categories, serving as a benchmark for understanding industry dynamics.

There are 25 companies on the Index with a combined market cap of more than $500B:

• They are growing an average of ~23% year-over-year
• EV/Annual Revenue is tracking to over 10x
• EV/Annual EBITDA is tracking to over 46x

The industry has experienced remarkable growth; at its inception in 2012, there were only 15 companies with a total market capitalization of just over $70 billion. Since that time, an additional 10 publicly traded companies have joined the list and have pushed the total market capitalization by five times to more than $500 billion.

We’ve invested a lot to create this Index. But more than anything, it is the product of the extensive expertise and experience of the McRock team and a testament to the leadership and insight behind our investments in software-enabled solutions for industrial sectors for the past three decades.

Why share the Index now?

McRock has consistently embraced the transformative potential of digital advancements within traditional industrial markets. It’s why we founded the firm. Big industries are undergoing rapid evolution and witnessing promising growth, owing to software’s capacity to yield substantial value through digital transformation. That’s not a surprise to anyone. But despite the widespread adoption of software tools in consumer and enterprise markets over the past decade, industrial sectors were initially slow to embrace digital strategies. This trend is now shifting, and software tools are positioned to play a pivotal role in ushering in a future marked by enhanced efficiency and productivity. The gap in software-driven technological solutions in industrial sectors is finally closing. Hallelujah!

Several factors contribute to the ongoing surge in software adoption across asset-intensive and legacy industries. First, the exponential increase in data volume plays a pivotal role, as formerly unconnected assets join the online sphere, and processes undergo digitization and automation. Next, the escalating trend of virtualization of hardware, driven by technological advancements and considerations related to budget and procurement, serves as another significant catalyst. Lastly, the current trajectory of software development is marked by increasing intelligence and seamless integration, making deployment more straightforward and cost-effective than ever before. In essence, the convergence of these factors propels the continuous evolution of software applications within diverse industrial landscapes.

Although historical performance does not guarantee future outcomes (you knew that would be worked in here eventually, right?) the Industrial Software sector is well positioned to continue its growth trajectory.

We appreciate the opportunity to be a part of this continuously expanding community, and we are enthusiastically committed to offering this benchmark for the growing Industrial Software sector. Over time we will incorporate more companies into this Index as our landscape scouring and trend monitoring continues. In the meantime, grab some popcorn and watch it with us. We can’t wait to see what happens next.