Generating Investment Generative AI Startups Raise Hundreds of Millions in Funding

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Different logos from companies like OpenAI,, Jasper and the dollar sign

The generative gold rush is on.

What’s new: Venture capitalists are betting hundreds of millions of dollars on startups that use AI to generate images, text, and more, Wired reported.

What’s happening: A handful of generative-AI startups have newly received nine-figure investments. They’re among over 140 nascent companies that aim to capitalize on applications in copywriting, coding, gaming, graphic design, and medicine, according to a growing list maintained by Stanford student David Song.

  • Stability AI, the London-based company behind the open-source text-to-image generator Stable Diffusion, raised over $100 million in a seed round that valued the firm at $1 billion. It plans to use the funds to develop infrastructure for DreamStudio, a commercial version of its text-to-image model, and triple the size of its workforce, which currently numbers around 100.
  • Jasper, which caters to the content-creation market, raised a $125 million Series A round. It offers a Chrome browser extension based on OpenAI’s GPT-3 language model that generates copywriting suggestions ranging from a single word to an entire article. The company boasts over 70,000 paying users.
  • Microsoft is poised to inject further capital into OpenAI having invested $1 billion in 2019. Google reportedly is considering a $200 million investment into natural language processing startup Co:here.

Behind the news: Established companies, too, are looking for ways to capitalize on AI’s emerging generative capabilities.

  • Microsoft is adding DALL·E 2 to its invitation-only Azure OpenAI service, which also includes GPT-3. It’s also integrating the image generator into Designer, an app that automates graphic design for social media and other uses.
  • Shutterstock, which distributes stock images, will allow users to generate custom images using DALL·E 2. The company also plans to compensate creators whose work was used to train their service.
  • Getty Images, which competes with Shutterstock, is adding AI-powered image editing tools from Bria, an Israeli startup. In September, it banned images that are wholly AI-generated.

Yes, but: Incumbents and class-action lawyers are lodging complaints over who owns what goes into — and what comes out of — models that generate creative works.

  • The Recording Industry Association of America recently requested that U.S. regulators add several generative AI web apps for remastering, remixing, or editing music to a watchlist for intellectual property violations.
  • Lawyers are preparing a class-action lawsuit against GitHub and Microsoft claiming that CoPilot, a model available on Microsoft’s Azure cloud service that generates computer code, was trained on open-source code without proper attribution.

Why it matters: Despite ongoing chatter about AI winter, it’s springtime for generative AI. Founders, investors, and trade organizations alike believe that this emerging technology has the potential to create huge value.

We’re thinking: Generative AI holds the spotlight, given the mass appeal of models that paint beautiful pictures in response to simple text prompts, but AI continues to advance in many areas that hold significant, unfulfilled commercial promise.


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