Arcee AI Secures Strategic Investment to Accelerate Enterprise-Grade AI Platform Built on AFM Foundation Models

San Francisco, CA — Arcee AI, the company pioneering a vertically-integrated AI platform built on compact, enterprise-optimized foundation models, today announced a new strategic funding round led by Prosperity7 Ventures and M12 (Microsoft’s Venture Fund), with participation from Hitachi Ventures, Wipro, JC2 Ventures, Samsung Next and Guidepoint CEO Albert Sebag. The round brings together financial strength and deep sector alignment to advance Arcee’s mission of closing the enterprise AI adoption gap through high-performance, secure, and controllable AI infrastructure.

Arcee’s platform sits on top of the Arcee Foundation Models (AFM), a family of foundation models designed from the ground up to meet the cost, compliance, and deployment needs of modern enterprises.

The first model in the AFM family, AFM-4.5B, was developed using cutting-edge techniques, including model merging, distillation, spectrum training, and synthetic data pipelines. As a result, AFM-4.5B delivers best-in-class per-parameter performance, is optimized for CPU and edge environments, and is fully commercially licensed for deployment across public cloud, private infrastructure, and on-premise networks.

Later this year, Arcee will expand the AFM family with a data-center-optimized sparse-activated model (approximately 120-140 billion parameters, with 20-30 billion active) designed for high-scale enterprise workloads requiring exceptional performance, efficiency, and cost-effectiveness.

“Our mission is to deliver scalable, intelligent AI that businesses can actually use in production, at the edge, in regulated sectors, and on infrastructure they control,” said Mark McQuade, CEO and Co-founder of Arcee AI. “This funding round validates that vision and brings the strategic partners needed to help us scale it globally.”

Arcee is more than a model provider - it's an enterprise-ready platform designed specifically for rapidly building and deploying vertical AI applications across industries. The Arcee solution includes:

• AFM Foundation Models: High-performance, compact, commercially licensed LLMs designed for flexibility and efficiency - from edge-optimized AFM-4.5B available today, to an upcoming data-center powerhouse model in the 120-140B parameter range with 20-30B active parameters, optimized for massive scale and cost efficiency.
• Integrated Enterprise Toolkits: Fully unified stack including Agent Harness for multi-agent orchestration, GuardRails for built-in compliance and governance, ToolBuilder for rapid integration (up to 80% faster), and Intelligent Router for optimal model selection and efficiency.
• Orchestra.live Application Layer: A versatile, cloud-native or self-hosted environment empowering enterprises to intuitively build, deploy, and orchestrate intelligent agents using natural language, accelerating AI deployment from months to days.
• ModelOps Toolkit for Complete Customization: Provides robust tools, including MergeKit, DistilKit, and RLFT, enabling enterprises to securely fine-tune, customize, and train AFMs on proprietary data, maintaining privacy, control, and model ownership.

Who Arcee Serves:

• Regulated Enterprises in healthcare, financial services, telecom, and the public sector that demand deterministic latency, robust compliance, privacy, and full explainability.
• Industrial & Energy Operators needing secure, reliable, and efficient on-device or air-gapped edge inference.
• Software Providers & System Integrators aiming to rapidly deliver vertically specialized AI solutions tailored precisely to client industry needs.

Why This Round, Why Now

This strategic round will allow Arcee to:

• Expand the AFM Model Family, including the rollout of AFM-57B MOE, a sparse-expert model delivering 100B-class performance at a fraction of the cost.
  
  
• Accelerate Extended Solutions GA, bringing features like Agent Harness, real-time GuardRails, multi-agent orchestration, and PII-safe pipelines to production customers.
  
  
• Launch global go-to-market partnerships through M12, Wipro, Hitachi, Samsung, and Aramco networks, bringing AFM-powered solutions to enterprises and government customers worldwide.
  

Strategic Partner Perspectives

• Prosperity7 Ventures: “We’re excited to back Arcee as they help enterprises take control of their AI. The Arcee team stands out for their practical, customer-focused approach—enabling companies to securely train and own their models in their own environments, moving beyond the limits of open-source model distillation and fine-tuning to deliver Arcee 4.5B: a model trained on high-quality data, built for real enterprise use cases.” said Abhishk Shukla, Managing Director at Prosperity7 Ventures.
  
  
• M12 (Microsoft’s Venture Fund): “Arcee has built upon its popular open source model merging toolkit towards an integrated product strategy for business applications, with differentiated elements such as industry-leading data-efficient SLMs. Their agent builder platform combines these advances in an all-in-one experience that will appeal to enterprise customers who value the task-specific capabilities at dramatically lower cost than alternatives,” said Michael Stewart, Managing Partner at M12, Microsoft’s Venture Fund.
  
  
• Hitachi Ventures: “Arcee is redefining enterprise AI with compact, infrastructure-aware SLMs that deliver meaningful performance, security, and control,” said Gayathri Radhakrishnan, Partner at Hitachi Ventures. “Their ability to run efficiently on CPUs at the edge makes AI far more accessible and practical for industrial and regulated environments. We’re proud to support Arcee as they scale the next generation of lightweight, production-ready AI.”
  
  
• JC2 Ventures (John Chambers): “Arcee’s vertically-focused AI platform and foundation models address precisely what enterprises urgently need today – rapid deployment, flexibility, and full compliance readiness," said John Chambers, founder and CEO of JC2 Ventures and Chairman Emeritus of Cisco. "Their unique combination of edge-to-cloud capabilities, enterprise-grade toolkits, and practical customization is exactly the type of innovative solution that JC2 Ventures looks to support. We’re excited to back Arcee as they lead the next wave of enterprise AI adoption.”
  

The Road Ahead

Arcee plans to double its research and engineering teams, expand its enterprise customer base across North America, EMEA, and Asia, and continue evolving the AFM model family to support multimodal, multilingual, and memory-augmented capabilities.

“This isn’t just capital. It’s acceleration,” added McQuade. “Together with our investors and partners, we’re delivering enterprise AI that’s smaller, faster, safer - and finally deployable.”

About Arcee AI
Arcee AI is building the next generation of foundation models and tooling for enterprise and industrial-scale AI. Its AFM family of foundation models and vertically-integrated stack help businesses deploy secure, controllable, and cost-effective AI at the edge, in the cloud, or anywhere in between. Learn more at www.arcee.ai.

About Prosperity7

Prosperity7 Ventures (P7) is the diversified venturing fund of Aramco Ventures, a subsidiary of Aramco, the world’s leading integrated energy and chemicals company. The fund's name derives from “Prosperity Well”, the 7th oil well drilled in Saudi Arabia and the first to strike oil. Taking forward this pioneering history, P7 invests globally with a long-term view in breakthrough technologies and transformational business models that will bring prosperity and positive impact on a vast scale. For more information, please visit https://www.prosperity7vc.com/

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