Cisco plans to acquire NeuralFabric, a Seattle-area startup founded by a group of Microsoft veterans that develops back-end software for companies to build and run their own generative AI models. Financial terms were not disclosed.
The Silicon Valley enterprise technology company stated the deal will bolster its AI Canvas initiative, a generative UI and collaboration environment announced earlier this year.
In its announcement Thursday morning, Cisco highlighted NeuralFabric’s expertise in distributed systems, model training, and flexible deployment as a complement to its existing AI assistant, cybersecurity models, and data fabric strategy.
DJ Sampath, senior vice president for AI software and platforms, stated in the announcement that the startup has “cracked a crucial part of this puzzle” by building technology that allows companies to develop their own domain-specific small language models using proprietary data across cloud or on-premises environments.
NeuralFabric, based in Redmond, was founded in 2023 by former Microsoft Azure engineering veteran Weijie Lin (CEO), longtime Microsoft executive John deVadoss, AI entrepreneur Jesus Rodriguez (president), and cloud and security veteran Mark Baciak (CTO), with former Microsoft director Drew Gude (chief revenue officer) also listed as an early executive.
The startup employs approximately nine people, according to LinkedIn. Cisco indicated the acquisition is expected to close in the second quarter of its 2026 fiscal year (by the end of January), after which NeuralFabric’s team will join the company’s AI Software and Platform organisation.
NeuralFabric had raised at least $5 million in funding as of a February 2024 announcement. Investors include Collab+Currency, CMT Digital, and New Form Capital.
The acquisition of NeuralFabric represents Cisco’s strategic effort to strengthen its position in enterprise generative AI infrastructure, addressing growing demand from large organisations seeking to develop proprietary AI models using internal data whilst maintaining control over sensitive information that cannot be shared with external AI service providers.
The emphasis on domain-specific small language models reflects a significant trend in enterprise AI adoption where organisations increasingly recognise that general-purpose large language models like ChatGPT, whilst impressive in breadth, lack the specialised knowledge and data access required for industry-specific applications in healthcare, financial services, manufacturing, and other sectors requiring deep domain expertise.
NeuralFabric’s technology enabling flexible deployment across cloud or on-premises environments addresses a critical enterprise requirement often overlooked in consumer-focused AI discussions. Many large organisations face regulatory constraints, data sovereignty requirements, or security policies mandating that certain workloads remain within their own data centres rather than migrating to public cloud infrastructure, creating demand for AI platforms supporting hybrid deployment models.
The founding team’s deep Microsoft background, particularly Lin’s Azure engineering experience and deVadoss’s executive tenure, provides credibility and technical depth that likely attracted Cisco’s interest. These veterans bring institutional knowledge about enterprise infrastructure requirements, cloud architecture patterns, and the organisational challenges large companies face when adopting new technologies, insights invaluable for building products that fit enterprise workflows.
The relatively small team size of approximately nine employees suggests NeuralFabric focused on developing core technology platform rather than building large sales and support organisations, a common strategy for early-stage infrastructure startups targeting acquisition by larger companies with established go-to-market capabilities. This lean approach maximises engineering output whilst minimising burn rate, making the company attractive acquisition target.
The $5 million funding raised by February 2024, whilst modest by current AI startup standards where some companies raise hundreds of millions, proves sufficient to validate technology and attract strategic acquirer interest. The investor roster including Collab+Currency, CMT Digital, and New Form Capital suggests backing from firms with expertise in enterprise software, digital assets, and emerging technologies.
