Inworld AI makes life-like characters for virtual worlds

Editor's note: As part of the Bay Area Inno Awards, the San Francisco Business Times and Silicon Valley Business Journal are highlighting nine startups from nine categories across the innovation space. We chose these firms based on their ability to fundamentally change the game in their respective fields, grow quickly and durably and develop useful products to solve compelling problems. Here's the honoree in the artificial intelligence category.

With the rise of the metaverse, brands are realizing they need to market themselves on virtual platforms. But, humans being humans, real people exploring these worlds likely don’t want to interact with soulless chat bots. They’d rather see the real thing, or at least something close to it.

That’s the thinking, at least, of the team behind Inworld AI, which has the legal name of Theai Inc. The startup’s founding trio is out to help individuals and companies create characters that can carry on life-like conversations with real humans. The Mountain View-based startup provides an artificial intelligence-driven character design service for virtual worlds and just raised a $50 million Series A round, bringing its total funding haul to $70 million.

“For the first time in maybe thousands of years, we’re able to use machine learning to have this two-way interaction ... That’s just never been technically possible before,” said Kylan Gibbs, chief product officer of Inworld AI. “We can facilitate the connection with these characters to facilitate real functional goals.”

Founded by Gibbs, CEO Ilya Gelfenbeyn and Chief Technology Officer Michael Ermolenko last year, the company launched the public beta of its character design service as it announced its Series A, according to Gibbs. The service currently has “hundreds” of active users, though Gibbs declined to provide a specific number or offer a range.

Gibbs said he sees a “paradigm shift” taking place where people can have real, life-like conversations with machines as they spend more time in virtual worlds. “As those new worlds expand, there’s all these environments, assets, and they’re really pretty. But these worlds are lacking life ... they don’t really help you deepen your relationships with the world,” he said.

The metaverse’s financial potential is huge. In a new analysis by Verified Market Research, the firm said that its market size in 2020 was $27.2 billion while in 2030 it could hit $824.5 billion. JP Morgan went further, predicting that annual revenues from the metaverse could hit $1 trillion. And Meta Platforms CEO Mark Zuckerberg, who has bet much of his company’s future on the metaverse, has described it as “the biggest opportunity for modern business since the creation of the internet.”

For Inworld, the company plans to make money through subscription revenues. Its current plans range from a limited free option to a $25 per-month plan for professional character developers. In addition, Inworld offers plans for business customers who require custom software integrations, which can be charged on either a monthly or annual basis.

Inworld’s co-founders have extensive experience in artificial intelligence, with each having worked at companies that were later acquired by Google LLC. Ermolenko and Gelfenbeyn worked for what would eventually become Dialogflow, an AI-based conversational tool for creating virtual agents. Gibbs spent time at DeepMind Technologies Ltd., whose AI program famously defeated the human player at the strategy board game Go in 2016.

The startup’s team also includes John Gaeta, the company’s chief creative officer who is the visionary visual effects designer behind the Matrix film trilogy. The experience of Inworld’s team was a key factor in the decision of Los Altos-based venture firm Section 32’s decision to invest, said Andy Harrison, managing partner for Section 32.

“Obviously the team is a huge part of our calculation,” Harrison said. “You have to create a no-code developer platform, you have to have an understanding of the next-generational language processing models ... It’s a very difficult thing to achieve.”

Harrison sees Inworld’s technology first being applied to create more sophisticated non-player characters in video games and the metaverse, but also sees valuable use cases for its technology in training and healthcare.

“There’s some powerful effects that can happen when people are connected to experiences in a more life-like fashion,” Harrison said. “The applications of that are very broad, and are very important, and will create great experiences from the way we interact with computers to the way we provide online services.”

About Theai Inc. (dba Inworld AI)