Gruve.ai promises software-like margins for AI tech consulting, disrupting decades-old Industry

Companies of all sizes are recognizing the game-changing possibilities of AI. Despite the excitement about the new technology, most of their pilot projects don’t make it into production.

Gruve.ai, a startup founded by the team behind Rahi Systems aims to help enterprises get AI solutions out of testing phase and into real-world application by using AI to deliver its services.

Rahi Systems is an IT solutions company acquired by Wesco for $225 million in 2022. 

IT services firms, including major players like Accenture, have long been the go-to consultants to implement new tech projects for companies when they don’t have the skilled staff in-house. However, given that their work relies on humans, their expertise often comes with a steep price tag.

“Technology services industry hasn’t been disrupted in the last 25 to 30 years,” Tarun Raisoni, CEO of Gruve, told TechCrunch. “AI truly changes that dynamic.”

Gruve hopes to change the traditional IT consultancy model in two key ways: first, by reducing the need to hire a large staff of consultants by using AI agents for repetitive tasks. Second, by charging clients based on usage rather than on an hourly basis.

In the past, VCs were generally not interested in investing in IT services in large part because their reliance on human labor made these businesses hard to scale. But by using AI agents instead of human consultants, Gruve can deliver software-like gross margins of 70% to 80%, which is significantly higher than the margins of traditional tech consultancies, said Navin Chaddha, managing partner at Mayfield.

Gruve’s innovative model and its team’s experience building Rahi Systems has helped it raise a $20 million Series A round led by Mayfield, with participation from Cisco Investments and other investors. The fresh capital brings Gruve’s total funding to $37.5 million.

Raisoni said that his team first meets with the client to determine their AI needs and prepares their data to support AI applications before recommending and deploying AI solutions.

“You must understand your customer’s business before you can implement because their business processes are different, their workflows are different. How they service their clients is different,” he said.

But once Gruve is ready to implement, AI agents will handle tasks such as security breach detection and the transition from on-premises to cloud CRM.

Similar to traditional IT consultancies, the company partners with select trusted tech vendors to implement their solutions for clients. Gruve’s current partners include large companies like Cisco, IBM’s Red Hat, and Google, as well as about a dozen AI-native startups like Glean and Supervity.

But unlike most tech consultancies, Gruve won’t bill its clients when the solution is first implemented. Their “services are available on demand, the same way electricity is provided or the same way cloud computing is provided,” Chaddha said. For example, if Gruve has implemented AI for security, the company will only charge the client upon a security breach detected and analyzed by the installed AI.