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salesforce (CRM) Invests in Onfido to Boost AI Capabilities

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Per CNBC reports, salesforce.com CRM along with other investors including Microsoft MSFT has spent $50 million on the identity verification start-up, Onfido.

Onfido’s latest financing round was led by salesforce’s venture capital unit and the Japanese financial group, SBI, with additional support from Microsoft’s venture arm and others.

According to CNBC, Onfido’s software “validates a person’s identity by taking their selfie and applying a mix of machine learning and human fraud experts to match their face with a government-issued ID.”

The funding will be used for investing "in the technology and in artificial intelligence (AI) component", adds Onfido’s management.

Strategic Investments Add Stimulus to salesforce

Investments in start-ups have always been one of salesforce’s key growth strategies. Over the past few years, the company either acquired or partnered with many such companies.

With these investments, the company aims to extend the capabilities of its platform and service offerings, increase the ecosystem of enterprise cloud companies and partners, accelerate the adoption of cloud technologies and create the next-generation of AI, mobile applications and connected products.

Per the company’s latest 10-K filing, as of Jan 31, 2019, it has made minority investments in more than 240 companies, which enable it to stay allied with the rapid pace of innovation that is taking place within the technology industry. The company invested in 95 companies last year.

Furthermore, salesforce has acquired companies, which it has previously put money on. Notably, Mulesoft — acquired by salesforce in 2018 — attracted interest from the company in 2015, when a $128-million funding round was led by Salesforce Ventures.

In March, Salesforce Ventures invested a significant amount in Kespry, a drone-based aerial intelligence solution provider, to boost its growth trajectory. Moreover, Vlocity, a developer of cloud solutions built on salesforce’s customer relationship platform, raised $60 million from Salesforce Ventures among others.

The company currently has several funds including the $50-million Australia Trailblazer Fund, $100 million Japan Trailblazer Fund, $100 million EMEA Fund, a $50-million AI Innovation Fund and so on.

Per CB Insights, venture capital (VC) funding in AI start-ups is increasing rapidly. According to the firm, a record $9.3-billion capital resource was pumped into US AI start-ups last year, which is more than eight times the funding levels of $1.1 billion in 2013.

We believe that salesforce’s sustained focus on expanding its business through strategic acquisitions and investments will drive growth in the long run.

salesforce.com, inc. Revenue (TTM)

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Zacks Rank and Stocks to Consider

Currently, salesforce has a Zacks Rank #3 (Hold). Two better-ranked stocks in the broader Computer and Technology sector are Fortinet, Inc. FTNT and Alteryx, Inc. AYX, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Fortinet and Alteryx is projected at 16.8% and 15.4%, respectively.

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