As the world continues to grapple with how to deal with the proliferation of deepfake content online, it appears that not all AI-generated videos are controversial. Synthesia, a London startup building products around hyper-realistic AI avatar technology, says the technology has been a big hit with businesses, with around 60,000 people (1 million users) using it. He says he creates avatar-based videos from text documents and uses them for sales and marketing purposes. For training etc.
Now, VCs also want to get involved. Synthesia today announced that it has closed a $180 million Series D funding round, boosting the company's valuation to $2.1 billion. NEA is leading the round, with participation from new investors WiL (World Innovation Lab), Atlassian Ventures, and PSP Growth, as well as previous backers GV and MMC Ventures. Synthesia has raised $330 million to date.
The startup plans to use the funding to hire, specifically expand in the Asia-Pacific region (the majority of Synthesia's business today is in Europe and North America), and continue to evolve its product.
“We're building on everything we're already doing right,” CEO and co-founder Victor Riparbelli said in an interview. “We want to make Avatar better,” he said, adding that the company's “long-term roadmap” includes more practical moves. Ability to port avatars to different environments. For example, an avatar that can interact with objects to provide physical demonstrations. An avatar that can interact with the user. It's also trying to eat some of its own dog food by building more “agents” to make it easier for customers to create avatar-based content.
One area where the company is not focusing on activity is M&A. Synthesia has not made any acquisitions, and Riparbelli said it has prioritized building its own technology, along with using APIs for things it doesn't build itself. For example, when it comes to voice, we work with Eleven Labs to leverage and fine-tune a variety of large-scale language models from third parties, rather than building our own.
The Synthesia round has been in the works for at least a few months. The Information reported in November 2024 that it had raised $150 million. To give you a little more insight into the funding situation, it's been about 18 months since Synthesia last disclosed funding. In June 2023, completed a $90 million round at a $1 billion valuation with previous backers including Kleiner Perkins and Accel.
Meanwhile, AI companies have become a big draw for VCs, offering a bright spot in a somewhat lackluster funding environment. According to PitchBook data, AI startups accounted for more than 37% of the $368.5 billion invested in overall startups worldwide in 2024. The percentage is even more pronounced in the US, where AI startups attracted nearly 50% of the $209 billion in investment last year.
To be sure, the field of AI is full of problems. The power consumption required to train and run AI models, significant copyright issues regarding how models are trained, the weaponization of AI as in the case of deepfakes and malicious hacking, and the potential for AI to replace humans and their work. Replacement and AI misinterpretation are all big problems. No meaningful solution has yet been reached. But there are also important drivers pushing the AI industry to even higher and more hyped heights. Synthesia was one of the companies named this week when the UK government announced its major AI action plan, offering multi-billion dollar deals to AI companies to reshape public services and the economy. I intend to do so.
Synthesia says it now has 60,000 customers, up from 50,000 in June 2023, and aims to be unique in the space as the go-to platform for companies looking to build video interactions. The aim is to carve out a niche market for the company.
This comes as advanced AI video capabilities become increasingly common. Some startups are working on the ability to extrapolate a complete product video from basic documentation, while others aim to build avatars or real-time video assistants capable of real-time interaction. Some claim it can create a life-like avatar of a user from just a minute of video. (A quick test to see how crowded the market is here is to plug Synthesia into Google and see how many search ads they buy for that name. There's a lot.)
Synthesia is not immune to product competition. The company has been building the 2.0 version of its platform for some time and has already released a number of related features. These include a unique take on a personal avatar that allows users to express emotions using their laptop's camera or cell phone. A Chrome extension that builds a basic video based on screen data. A unique version of the AI video assistant that can convert documents into videos. Multilingual options. It also has collaboration features that allow people to edit videos at the same time.
But more importantly, Riparbelli believes the company's focus squarely on business users gives it an advantage, which investors say is what makes the startup so appealing.
“Synthesia is one of the few AI companies that can actually take cutting-edge AI and translate it into something that's actually useful,” Vidhu Shanmugaraja, a partner at Google Ventures in London, said in an interview. spoke. “There's a lot of customer focus. They're obsessed with driving value in a hands-on environment. It's very difficult to bring that together into a secure and compliant platform.”
It's also interesting that Atlassian is investing in this round. The company is bringing AI capabilities to its various apps, and it seems like it's only a matter of time before platforms like Jira start adding more video tools to the mix. A door to collaboration with portfolio companies.