Atlassian, Telstra Ventures back Israeli AI start-up Tabnine in $39m raise

The software titan is ramping up investment in the space, joining Telstra Ventures in backing the first AI-powered assistant for developers.

Mike Cannon-Brookes and fellow founder of Atlassian, Scott Farquhar say the company has a competitive advantage when it comes to AI.

Atlassian is stepping up its artificial intelligence capabilities and backing Israeli technology, joining a group of investors to tip $US25m ($39m) into what has been touted as the first AI-powered assistant for software developers.

Telstra’s venture capital arm led the Series B round for Tel Aviv-based start-up Tabnine, which lifts its total funding to date to $US42.5m.

Atlassian – which last week reported its fifth-consecutive quarter of slower revenue growth, prompting a 10 per cent share price fall and billions in paper losses for its founders – participated in the round as a first-time investor with an undisclosed sum.

Other investors included Elaia, Headline, Hetz Ventures, Khosla Ventures, and TPY Capital.

Atlassian has managed to regain more than half of its losses, with its Nasdaq-listed shares down 4.7 per cent for the week.

Co-founder and co-chief executive Scott Farquhar is seeking to harness the power of AI – talking up Atlassian’s competitive advantage on the technology – to pave the next wave of growth for the company.

It has been scouring the market for acquisitions, buying Loom — a platform that provides AI-powered and asynchronous video messages for $1.5bn — its biggest acquisition in dollar terms last month, and last week took over Melbourne software firm Airtrack to enhance its Jira service management product.

“If you want to train AI on data inside your organisation, that data cannot be isolated to a few people. As a customer, you have decades worth of data that’s available to train their AI on and help them make decisions — that’s a really big part of our advantage,” Mr Farquhar said during Atlassian’s quarterly results call last week.

It comes as Australia’s biggest technology companies, including Atlassian, have joined their global peers rallying behind Israel – a cradle of innovation within their sector – following the war with Hamas.

Tabnine has created an AI coding assistant to accelerate and improve the software development life cycle. It says it has been used by millions of developers around the world to “boost code quality and developer happiness using generative AI technology”.

Tabnine co-founder and chief executive Dror Weiss said it was “the only generative AI assistant operating at scale that can be deployed securely and privately – either on-premises or via Virtual Private Cloud.”.

“Organisations are racing to adopt generative AI and prove its value across most aspects of the business. However, the use of generative AI in the SDLC has already delivered real business results, and now is the time to meet soaring enterprise demand” Mr Weiss said.

“We’re grateful to partner with our new and existing investors to address customers’ development needs by offering a proven solution that also delivers on security, privacy, and consistency.”

A survey by GBK Collective found that 78 per cent of companies expect to use AI for software development within the next three to five years. Freshworks Inc. estimated that US. companies could save over $US15,000 per IT employee each year by using AI to automate repetitive tasks, while an IDC study in May found that nearly 40 per cent of IT executives said generative AI “will allow us to create much more innovative software.”

Peter Lenke, head of Atlassian Ventures said: “Ongoing innovation for the developer community and its vibrant ecosystem are key in bringing this future to life by allowing organisations to drive growth at speed and scale,” he said.

“The Tabnine team has been empowering these developers with generative AI for years. We’re excited to support the company on its continued journey and see great benefit to Atlassian’s 200,000-plus customers.”

Telstra Ventures general partner Steve Schmidt said: “There’s been a spectacular acceleration in generative AI systems over the last few months and only a handful of researchers around the world are advancing the science behind these systems”.

“Tabnine is one of those companies. While other systems are black boxes that can’t be trained on company data and demand access to your code, that’s not the case for Tabnine. AI that ships software better and faster without IP exposure is a game-changer, and we believe Tabnine is at the forefront of this revolution.”

Originally published as Atlassian, Telstra Ventures back Israeli AI start-up Tabnine in $39m raise