Generative AI startup Synthesia has raised $180m and hit a valuation of $2.1bn as it looks to capture market share in a video generation sector that’s seen a doubling down from Big Tech in the past year.
The all-equity Series D round was led by US-based venture firm NEA and featured participation from existing investors including GV and MMC Ventures, alongside new backers including World Innovation Lab and Atlassian Ventures. It takes the startup’s total funding to over $330m.
Founded in 2017, London-based Synthesia has been building its GenAI-powered video platform for enterprises since before ChatGPT-triggered the AI boom. It says it has 60k customers including the likes of Amazon, Ocado and Johnson & Johnson.
But now it’s not just up against a crop of new startups developing similar tools, it’s also got Big Tech to contend with — with OpenAI, Meta and Google all launching GenAI video products in the past year.
The funding will be used to invest in research and development and support the startup’s expansion in North America, Europe, Japan and Australia.
Competition from big tech
Synthesia is building a platform that allows enterprise customers to create AI-generated avatars for videos to be used in learning and development, customer support, marketing and sales functions.
While the startup has built its own text-to-video generation models, it also integrates with other providers like OpenAI, Anthropic and Gemini, to provide functions like script writing assistance, says Victor Riparbelli, CEO and cofounder of Synthesia.
“Even if someone came up with a better avatar model than us tomorrow, maybe it would affect the business to some extent” Riparbelli says, but it wouldn’t, he argues, lead to an exodus of customers. “What [customers] are actually buying is a product and a workflow that works.”
For now, Synthesia is more directly competing with startups like US duo Colossyan and HeyGen and Israeli company Hour One AI.
There is a risk that Big Tech companies cotton onto the opportunity in avatar video generation for enterprises and pump huge sums into creating a product — and both OpenAI and Google have well-established enterprise offerings for their GenAI text-to-text offerings.
There’s also the possibility of Big Tech deciding to buy rather than build, though Riparbelli says that Synthesia hasn’t signalled an interest in being acquired. He says he can’t disclose whether there have been approaches from companies looking to buy.
Staying Europe-based
While some of Europe’s most promising AI startups have upped sticks to the US to be closer to tech talent and customers — like AI sales agent builder 11x and text-to-voice generator ElevenLabs — Synthesia has no plans to leave Europe, despite the majority of its revenue coming from outside the continent.
While Riparbelli says he can’t guarantee the company will never move to the other side of the Atlantic, it’s currently “centralising the leadership team and gravitational centre of the company in Europe”.
What’s keeping Synthesia in the region at the moment is access to technical talent from its universities and a growing ecosystem of big tech companies and scaleups — which make it easier to lure talent from the US, says Riparbelli.
That’s particularly important because accessing homegrown senior talent with experience of scaling SaaS and AI companies at scale is tricky — because fewer companies have been there and done it in Europe in the past, he adds.
Synthesia’s new CTO, Peter Hill, who was one of the first 100 people at Amazon, has just been relocated from Seattle to London.
The company has more than 100 employees in the US, according to LinkedIn data; roughly half the number in the UK.
The startup still has all of the $90m Series C it picked up in 2023, which it raised from investors including Accel and Google Ventures, says Riparbelli.
More than half of the fresh funds will be spent on R&D as it looks to improve its own video generation models, build an AI agent to help users produce videos from scratch and add the interactive functionality into its videos.
Read the orginal article: https://sifted.eu/articles/genai-startup-synthesia-raise-180m-news/
