More money is pouring into AI-focused startups. DeepL, which makes automated text translation and writing tools that compete with the likes of Google Translate and Grammarly, announced Wednesday that it has raised an additional $300 million. Its current value is $2 billion post-money.
This round, led by Index Ventures, highlights the enthusiastic interest investors have in AI startups at the moment, and how companies are capitalizing on the opportunity wherever possible. Although DeepL is still not profitable, it was valued at $1 billion in January 2023, when it raised just over $100 million.
The new funding will be used for further sales and marketing as well as further research and development.
The Cologne, Germany-based company said more than 100,000 companies and organizations use its tools. Given that this is only a small portion of the company's addressable market, the goal is to significantly expand this.
CEO and founder Jarek Kutylowski said in an interview with TechCrunch earlier this month that the company has grown primarily organically so far and plans to add more customers and expand business with existing customers. He said he is looking to step up sales and marketing efforts.
This highlights a key issue for AI companies targeting other businesses: many executives are pushing their teams to strategize how AI can be used within their organizations, but many projects have not progressed beyond the pilot or small-scale deployment stage. Accelerating this will be paramount for AI technology vendors.
“Inbound is great, but we want to build stronger relationships with our customers,” he said. “Inbound has its limits, so we're working hard to develop better outbound capabilities. At some point, we have to start solving problems together with our customers. It's changing quite a bit, which is complex and interesting for a research-based company.”
Kutylowski said that currently about 60% of the company's staff are engineers, and that the company plans to hire more non-technical people in the future. In fact, one of DeepL's biggest challenges will be balancing that with a focus on research.
The startup currently supports 32 different languages and is steadily expanding its product portfolio. A recent addition to this list is one with a strong focus on enterprises. DeepL Write Pro is described as a “writing assistant specifically tailored for business.” Customers signed up for DeepL's tools include Zendesk, Nikkei, Coursera, Deutsche Bahn, and more.
“Companies want to control how their employees talk, right?” Kutilousi says.
However, DeepL faces potentially strong competition from a wide range of companies. Some companies specialize in the same field, and platform companies like Google, Amazon, and Microsoft already have businesses in areas like translation that they are looking to enhance with AI.
Some of the new fundamental AI companies, such as OpenAI and Anthropic, are not yet in the same space as DeepL, but there are clear opportunities for these companies as well. While some of these companies may not be focusing on improving translation or writing right now, making AI feel more seamless and “human” remains a priority. , DeepL cannot rest on its laurels in the leadership position it currently claims.
ICONIQ Growth, Teachers' Venture Growth, and previous backers IVP, Aomico, and WiL also participated in the round.
“DeepL's phenomenal success is a bit of an open secret in the business world,” Danny Reimer of Index Ventures said in a statement. “The company has been incredibly thoughtful about developing cutting-edge AI products that provide real, immediate value to their customers.”