SAN FRANCISCO, Aug 1 (Reuters) - Contextual AI, a

startup that sells a tool to improve the performance of

artificial intelligence models, raised $80 million through a

Series A funding, the company told Reuters.

The Mountain View, California company declined to disclose

its post-money valuation, but data provider PitchBook pegged the

figure at an estimated $609 million.

Led by venture capital firm Greycroft, funds came from a

slew of existing investors including Bain Capital Ventures and

Lightspeed, which previously pumped $20 million to launch the

company in 2023.

Contextual AI's CEO Douwe Kiela previously supervised a team

at Meta that invented a technique known as retrieval

augmented generation (RAG).

After OpenAI's ChatGPT propelled generative AI into the

mainstream last year, AI practitioners increasingly adopted RAG

to help overcome the limitations of off-the-shelf AI models,

such as hallucinations which produce inaccurate responses.

RAG works by feeding curated information into an AI model to

give it more context so that the output is more accurate and up

to date.

"It's been interesting to see RAG become a completely

mainstream idea," Kiela told Reuters. "We don't have to explain

it anymore."

The product is not yet generally available. The new funds

are focused towards getting it into the market, though Kiela

said he did not have a launch timeline.

For now, Contextual AI is selectively working with companies

in the finance, technology and media sectors. HSBC ( HSBC ) and

Qualcomm ( QCOM ) are clients.

Cloud providers like Microsoft Azure and Amazon Web Services

and some startups are already offering RAG built into their AI

software suites.