Hang Ten Systems, the AI startup founded just four months ago by former Infosys CEO Vishal Sikka, has expanded its seed funding by another $53 million. This new investment round closes just five weeks after the initial $32 million seed round closed, the company told TechCrunch.
The new investment, led by Temasek’s early-stage investment platform Xora, brings Hang Ten’s total funding to $85 million. Mayfield, who led the company’s initial investment, also participated. Other investors include Aramco Ventures, Intel CEO Lip Bu Tan, Micron CEO Sanjay Mehrotra, and Yahoo co-founder Jerry Yang, who is also on the company’s board.
Founded in May, Hang Ten is betting that AI will fundamentally reshape the way large enterprises build and maintain software. The startup typically advises companies with more than $10 billion in annual revenue on their AI strategies and also helps them build and modernize their software.
“The construction part itself has basically gone to zero marginal cost and zero time,” Sikka (pictured above) told TechCrunch. He argued that AI is shifting the focus of software development from writing code to defining requirements and verifying that the system works as intended.
This paper seems to be resonating with customers. Within 25 days of the first meeting with a customer, Hang Ten signed a multi-million dollar contract to build a mission-critical software system, Sikka said, adding that he had never seen an enterprise deal move so quickly.
Sikka said Hang Ten is currently working with a mix of existing customers and late-stage prospects across 21 large companies, with some prospects in the proposal or contract negotiation stage. The startup has secured multiple seven-figure deals and is pursuing eight-figure deals. In addition, its customers span the United States, Europe, the Middle East, and Asia, and include Fresenius Kabi, Saudi Aramco, and Siemens Energy.
Sikka said the initial customer acquisition led Xora to approach Hang Ten about investing, adding that Xora saw an opportunity to introduce the startup to other companies in Temasek’s portfolio. Sikka declined to disclose Hang Teng’s valuation, but said the second round of seed funding has increased significantly.
With the new capital, Hang Ten plans to expand its engineering, consulting and sales teams. Sikka said the Palo Alto-based startup currently has about 20 to 25 employees in the United States, the Middle East and Australia, with plans to hire in Europe and India.
Hang Ten enters a crowded market where traditional consulting firms are racing to incorporate generative AI into their services while AI model developers like OpenAI and Anthropic expand their enterprise offerings.
“Businesses still need a trusted partner who is independent from the underlying platform, who works with them and who only looks out for their best interests,” Sikka said. “There’s always room for companies like ours.”
Hang Ten says its advantage lies not in building another AI model, but in adapting AI to the complex software development processes of large enterprises. Co-founder and chief design officer Sanjay Rajagopalan told TechCrunch that the startup’s engineers rely on Hobie, an in-house framework that packages reusable AI “skills” for regulated industries and complex enterprise software projects.
“We actually offer production software,” Rajagopalan said. “It’s not like we’re doing any kind of PoC.”
Hang Ten’s approach is already competing with traditional system integrators. Sikka said that while much of the company’s work is replacing existing providers, more than half of its current opportunities involve new projects that companies have been putting off, rather than work taken from existing vendors.
Mr. Rajagopalan noted that while Hang Ten is now able to use a team of about two to four people for some projects that previously required about 30 people, the customer or an independent third party is still responsible for final quality checks and certification. He said the startup promises customers 10x improvements in cost, speed, or a combination of the two.
Even four months after its debut, Hang Ten has received serious acquisition offers from “very large companies,” Sikka told TechCrunch. However, he declined to identify potential buyers. He said he is declining the offer for now because the startup is focused on expanding its business.
Prior to founding Hang Ten, Mr. Sikka co-founded enterprise AI startup VianAI in 2019 after leaving Infosys in 2017. The company raised $50 million in seed funding, followed by $140 million in a 2021 round led by SoftBank Vision Fund 2.
Sikka left the startup in April, according to his LinkedIn profile. He told TechCrunch that VianAI is “moving forward with the deal,” but declined to provide further details.
On how startups like Hang Ten can disrupt service providers like Infosys, Sikka said: “We’re lucky that we don’t have the burden of a legacy that we have to transform.”
The startup’s name comes from “hang ten,” a surfing maneuver in which surfers ride using all 10 toes on the front of the board. For Sikka, this reflects the startup’s ambition to help businesses ride the ongoing wave of AI, which he calls “probably the biggest wave of our lifetime.”
If you make a purchase through links in our articles, we may earn a small commission. This does not affect editorial independence.
