Mechanical Orchard Lands $50M Investment Round from Alphabet’s GV, Led by Former Pivotal CEO

Digital transformation, the process of updating outdated applications and processes through cloud technologies and digital workflows, presents significant challenges and risks for organizations. In a 2023 report by Harvard Business Review, it was revealed that while 89% of large companies are actively pursuing digital and AI transformation initiatives, they have only managed to realize 31% of the expected revenue increase and 25% of the anticipated cost savings from these efforts.

Rob Mee, the founder of Mechanical Orchard and former CEO of Pivotal, recognized these challenges after years of working with enterprises struggling with outdated infrastructure. In 2022, he established Mechanical Orchard to address the complexities of digital transformation. The startup utilizes "AI-enhanced" tools and cloud resources to create modernized versions of companies' legacy applications and services. Mee noted the reluctance among IT leaders to engage in the modernization of critical legacy systems, citing concerns that the associated risks might outweigh the potential benefits. However, he emphasized that with aging software posing an existential threat to businesses, there is no longer the option to postpone necessary updates. “There is simply no more road to kick the can down,” he stated.

Mee's previous experience at Pivotal, which saw significant stock losses and was ultimately acquired by VMware for $2.7 billion—far below its peak value—shaped his perspective on the importance of successful digital transformation. Despite this background, he assures that Mechanical Orchard is on a promising growth path, with large enterprise clients in sectors such as retail and logistics already in the pipeline.

“There’s interest and opportunity across many sectors where legacy IT is a challenge, like manufacturing, transport, and financial services,” Mee explained. Mechanical Orchard's strategy focuses on reducing risk for IT leaders by providing continuous proof that migration efforts are effective, which in turn builds confidence in the transformation process.

In a demonstration of confidence from investors, Mechanical Orchard recently completed a $50 million Series B funding round led by GV (formerly Google Ventures), Alphabet's corporate venture arm. This latest funding round brings the company’s total capital raised to $74 million. Notably, Mee mentioned that the funding was unsolicited; Mechanical Orchard was not actively seeking investment when GV approached them with a promising partnership opportunity.

Many vendors have developed tools and entire business divisions to support digital transformation, with companies like Box once operating a consulting division called Box Transform to assist organizations with the intricacies of their digital journeys. However, Mechanical Orchard differentiates itself by leveraging generative AI as a "pair programmer" to rewrite and develop new software for clients. While employing AI for programming carries inherent risks, Mee assures that developers are always involved in the debugging and review process of the final products.

Though Mee did not disclose the specific generative AI platform utilized by Mechanical Orchard or whether the company trains its own internal coding models, he acknowledged that this information might be of interest to customers concerned about sensitive code being processed through third-party services like GitHub Copilot or AWS Q Developer.

To effectively "transform" a company's legacy systems—such as those running on mainframes—Mechanical Orchard begins by analyzing the system’s behavior, identifying dependencies, and breaking down its components to understand their functions. The team then writes cloud-hosted code that replicates the legacy system's capabilities. Importantly, customers retain ownership of this code and have the flexibility to deploy it wherever they choose.

The new funding will primarily be allocated toward research and development, with a focus on enhancing the company’s AI capabilities. Currently, Mechanical Orchard employs approximately 90 staff members across its offices in the U.K., Ireland, Italy, and Germany, and it is well-positioned to continue its growth in the digital transformation space. As companies face increasing pressure to modernize their legacy systems, Mechanical Orchard’s approach and technology could play a crucial role in facilitating successful transitions to more efficient and effective digital infrastructures.