IBM buys small Denver startup AlchemyAPI as part of effort to improve Watson system

IBM has purchased a small Denver startup as part of its effort to improve its Watson cognitive computing system.

The technology giant announced the acquisition of AlchemyAPI on Wednesday but didn't release terms of the deal.

It comes as IBM is shifting away from hardware to focus on business analytics, cloud computing and mobile services. Last year the company invested more than $1 billion in Watson, best known for beating human contestants on "Jeopardy!". That included $100 million for venture investments.

AlchemyAPI, founded in 2005, has 18 employees and works with 40,000 software developers around the world. Despite the size difference, founder and CEO Elliot Turner says the two companies share a passion for turning unstructured data into useful information.

The company plans to expand but will remain in Denver.