A small Palo Alto startup led by a pair of ex-Googlers landed $150 million at a $1 billion valuation as it races to compete with OpenAI LLC and tech giants in developing generative artificial intelligence software.
In addition to announcing its outsized Series A round, Character Technologies Inc. — which does business as Character.AI — on Thursday released an early preview of the newest version of its software that allows users to chat with AI-generated "characters" who can be anybody they want, real or imagined.
"The potential use cases are infinite," co-founder and CEO Noam Shazeer said in Thursday's announcement.
Shazeer and Character President Daniel De Freitas founded the startup just 16 months ago after leaving Alphabet Inc.'s Google, where they led a chatbot team that built a technology called LaMDA, short for Language Model for Dialogue Applications. That's the technology that attracted attention last year when a Google engineer said he believed it had become sentient.
Character's funding announcement comes two days after Google began to release its artificial intelligence chatbot called Bard and San Francisco-based OpenAI released the latest generation of its generative AI called GPT 4.
Generative AI is one of the hottest tech fields today, according to a report issued Tuesday by PitchBook Data which said startups working on versions of the technology attracted more than $9 billion in venture dollars invested in 2021 and 2022. PitchBook projects that use cases for the technology will be worth a total of $42.6 billion in 2023 and grow to $98.1 billion by 2026.
Character's chatbot was created by its small team of 22 people who all work in Palo Alto. It said on Thursday that its website is getting nearly 100 million monthly site visits, a four-fold increase in two months, and its users have created more than 2.7 million characters to interact with.
"For years, we’ve known the potential and power of conversational AI, and it’s incredibly rewarding to see people from around the globe use Character.AI for a huge variety of use cases," co-founder DeFreitas said in Thursday's announcement.
This week's funding was led by Andreessen Horowitz, whose partner Sarah Wang will join Character.AI’s board of directors.
“Noam and Daniel have been trailblazers in AI for nearly two decades, and we're excited to support them in the next chapter of their journey," Wang said in the announcement.
Other investing include former GitHub CEO Nat Friedman, Color Genomics co-founder Elad Gil, SV Angel and A Capital.
