Kaito AI raises $5.3 million to build ChatGPT-powered search engine for crypto

As investors flock away from crypto and into AI, one investment firm is taking a different approach.

Dragonfly Capital is leading Kaito AI's $5.3 million raise to build an AI-powered search engine for the crypto industry. The product has been in private beta with institutional investors since December and the investment firm is saying it is "revolutionizing" the way they invest.

"With so much information and data available, it can be overwhelming to identify the most valuable insights for informed investment decisions," said Gengmo Qi, partner at Dragonfly, in a release. "Kaito is solving this challenge by not only aggregating information, but making it readily accessible and actionable.”

Kaito's cap table for this round features several industry heavyweights including Sequoia Capital China, Jane Street, AlphaLab Capital and Mirana Ventures, said the company in the release.

ChatGPT and the AI boom

So what's drawing investors in? Could it perhaps be the mention of buzzy new AI technology ChatGPT, which Kaito AI is using to bolster its search engine experience?

Since the launch of ChatGPT in late November, an AI chatbot developed by Sam Altman's OpenAI, a frenzy has formed around ChatGPT as well as AI-linked projects and crypto tokens.

Big tech companies are already looking to make a land grab in the space. Microsoft relaunched its Bing search engine with ChatGPT technology, naming it Sydney.

Despite the novelty, there have been some issues; a recent conversation with Sydney unsettled New York Times columnist Kevin Roose. Meanwhile Google unveiled its ChatGPT rival Bard, which made a factual error in its first demo.

On the opposite end of the spectrum, more AI startups are emerging including within the crypto space. For example, two-month old ImgnAI, a crypto startup that touts its use of AI, is seeking to raise $7.5 million at a $50 million equity valuation, The Block reported.

Crypto's information problem

At its core, Kaito is an AI startup that is trying to solve  the information fragmentation issue in crypto. Data and information is often dispersed across a number of sources such as Discord, Medium, Mirror, podcast transcripts as well as news and research platforms, the company said in the release. Kaito brings this information all in the one place through its AI-powered search engine.

The startup leverages AI not only to aggregate information but also for ranking, recommendations and topic mining, the company said in the release.

"Over the past 12 months Kaito has built one of the most extensive information databases in crypto," said Yu Hu, founder and CEO of Kaito, in the release. "By combining this database and our in-house AI technologies with the advanced language models of ChatGPT/GPT-3, we aim to offer a far superior search experience compared to current alternatives in the market.”

The product will be available on public beta from today.

This story has been updated with additional details on the investors provided by the startup.