Deepset, founded in 2018, has crafted a distinctive business model around large language models (LLMs) with innovative products and growth strategies. Here’s a detailed overview:
Business Model
Haystack
- Open-Source Framework: Haystack is a versatile, open-source framework that enables developers to build and customize LLM applications. It provides access to pre-trained models and natural language processing (NLP) tools, allowing adaptation to specific domains and use cases[3].
deepset Cloud
- SaaS Platform: Built on top of Haystack, deepset Cloud offers a comprehensive suite of tools for developing and deploying LLM-powered business applications. Features include data integration, model optimization, prototyping, testing, and monitoring, streamlining the deployment of LLM solutions[4].
Revenue Generation
- Subscriptions and Services: Deepset generates revenue primarily through subscriptions to deepset Cloud. They also offer services to help customers fine-tune LLMs for their specific needs, leveraging the open-source Haystack framework as a foundation[3].
Early Growth Strategies
Focus on Enterprise Customers
- Strategic Partnerships: Deepset targeted enterprise customers early on, working with major companies like Alcatel-Lucent Enterprise, Airbus, and Manz. This approach allowed them to develop custom LLM applications tailored to complex, high-value needs[3].
Leveraging Open-Source
- Community Engagement: By making Haystack open-source, Deepset attracted a robust developer community, which helped showcase their technology and build a user base. This open-source approach provided a strong foundation for their commercial offerings[3].
Rapid Iteration
- Prototyping and Feedback: Deepset emphasizes rapid prototyping and testing. They encourage customers to quickly build, test, and iterate on prototypes, ensuring that the products developed are well-aligned with user needs and market demands[1].
Modular, Model-Agnostic Approach
- Flexibility: Deepset’s products are designed to be modular and model-agnostic, allowing customers to select and integrate the LLM that best suits their needs. This flexibility prevents vendor lock-in and supports a wide range of use cases[1].
Growth and Funding
- Funding and Expansion: As of 2023, Deepset has raised a total of $46 million. The significant funding boost has facilitated a 250% increase in active users since the beginning of the year. The company plans to use this funding to expand their sales and marketing efforts and continue developing Haystack and deepset Cloud[3].
Deepset’s strategic focus on enterprise customers, open-source engagement, rapid iteration, and flexible product design has positioned it as a leader in the LLM space, setting a strong foundation for future growth and innovation.