IBM Launches A $100 Million VC Fund For Watson-Based Tech Startups

Watson Goes Live at Cleveland Clinic

IBM announces some major changes within its analytics business unit, specifically its Watson supercomputer division, in hopes of increasing the performance and bringing profitability in line with what IBM had originally expected. Three years after IBM began trying to turn Watson into a profitable business venture, the division has earned a total revenue of less than $100 million. This is far from IBM’s forecast of $1 billion in Watson-generated revenue by 2018.

In general, Watson has been given more of a chance than most technology vendors could dream of. The potential that supercomputers might unlock in healthcare drove some of the most prestigious healthcare organizations in the world to IBMs doorstep, willing to welcome Watson and IBM engineers into their organizations to help train the thinking-computer on how to analyze medical cases, extract EHR data, and calculate risk and outcomes probability. The results of these efforts have demonstrated that, while the technology can eventually learn the healthcare, the time it takes for IBMs engineers to perfect these tools is far longer than they’d hoped.

As a result, IBM is looking to startups. Why design, code, and pilot every Watson-based application in house when healthcare IT has a thriving startup space? While Watson has been warmly embraced by leading healthcare organizations, its adoption within the healthcare IT startup space has been limited. IBM wants to change this, and in response, it has launched both an API, and a $100 million VC fund, to ensure that startups have the infrastructure and capital they need to bring new Watson-based technologies to market. IBM hopes that an army of Watson-based apps will help it monetize business faster.

There are very few details available at this point on whether IBM will directly fund startups that have been accepted into its Watson developer program, or if it will work with existing VC firms to increase the amount of money made available to Watson-based startups looking for early stage funding rounds.

The new VC fund is only one project within an overall $1 billion additional investment in Watson that IBM announced this week. The company also unveiled a set of business analytics features that it will market to help its customers do more with Watson once they own it. The first, Watson’s Discovery Advisor, is a program designed to help expedite the R&D process for pharmaceutical companies. The Analytics Advisor helps end users extract information from big data without needing analytics experience by creating graphics visualizations of naturally spoken questions. Providing accurate data-specific answers to questions asked with natural language, rather than keywords, has proven to be difficult for even Google.

IBM also announced that the Watson business division, which currently consists of only a few hundred employees, would be expanded to 2,000 and that many of the new hires would be sales staff and consultants.

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