As the world continues to work out how to deal with the explosion of fake content online, it seems that not all AI-generated videos are stirring up controversy. Synthesia, a London startup that builds products around highly realistic AI avatar technology, says it’s a big hit with enterprises, with about 60,000 of them — 1 million users — using the technology to build avatar-based videos from text documents, for sales and marketing. for training and more.
Now VCs also want in on the action. Synthesia confirmed today that it has closed a $180 million funding round, a Series D that catapults the company’s valuation to $2.1 billion. KMA leads the round, with participation from new investors WiL (World Innovation Lab), Atlassian Ventures and PSP Growth, plus previous backers GV and MMC Ventures. Synthesia has raised $330 million to date.
The startup plans to use the funding for hiring, particularly to expand in Asia Pacific — most of Synthesia’s business today is in Europe and North America — and to continue developing its products.
“We’re doubling down on all the things we’re already doing right,” CEO and co-founder Victor Riparbelli said in an interview. “We want to make our avatars better.” He said the company’s “long-term roadmap” includes more realistic moves; the ability to transfer avatars to different environments; avatars that can interact with objects, for example, to provide physical demonstrations; and avatars that can interact with users. It will also eat some of its own tests by building more “agents” to help customers create avatar-based content more easily.
One area where it is not looking for activity is M&A. Synthesia has not made any acquisitions to date, and Riparbelli said its preference is to build its own technology in-house, over using APIs for what it doesn’t build itself. For example, he works with Eleven Labs for voice, and taps and tunes a number of third-party Major Language Models instead of creating his own.
Synthesia’s round has been in the works for at least a few months: Information reported it was raising $150 million in November 2024. For a little more fundraising context, it’s been about 18 months since Synthesia last disclosed funding: in June 2023, it closed a $90 million round at a $1 billion valuation with previous backers including Kleiner Perkins and Accel.
In the meantime, AI companies have been a huge magnet for VCs, providing a bright spot in a somewhat lackluster funding landscape. AI startups account for more than 37% of the $368.5 billion invested in all startups in 2024 globally, according to PitchBook data. In the US, the proportion was even starker, with AI startups garnering nearly 50% of the $209 billion invested last year.
And yes, the issues are many in the field of AI. Energy consumption required to train and run AI models, key copyright issues around how models are trained, AI being weaponized as in deep forgery or malicious hacking, AI replacing humans and the work of them, and AI getting it wrong—all big problems that have yet to be meaningfully resolved. But there are also some important advocates who will push the AI industry to even higher and loftier heights. Synthesia was one of the companies scrutinized by the UK government this week when it launched its major AI action plan, aiming to make billions in deals for AI companies to rebuild public services and the economy.
Synthesia says it now has 60,000 businesses as customers, up from 50,000 in June 2023, and its goal has been to establish its niche in the space as the go-to platform for enterprises looking to build their video interactions.
It’s doing so at a time when advanced AI video functionality is becoming increasingly common. There are startups working on the ability to extrapolate full product videos from underlying documents, while others aim to build avatars capable of real-time interactions and real-time video assistants. Some claim to be able to create living avatars of their users from just one minute of video. (A simple test to see how crowded the market is here is to Google Synthesia and see how many companies are buying search ads against its name. There are a lot.)
Synthesis is not immune to product race. It has been building a “2.0” version of its platform for some time and has already released a number of related features, including its look at personal avatars that users can make with a laptop or phone camera that displays emotions; a Chrome extension that creates basic videos based on screen data; its version of an AI video assistant that can convert documents to video; multilingual options; and collaboration features for people to edit a video at the same time.
More to the point, though, Riparbelli believes the company has an advantage by focusing directly on business users, and its investors say that’s what makes the startup attractive.
“Synthesia is one of the few AI companies that can take cutting-edge AI and actually translate it into something of real utility,” Vidu Shanmugarajah, a partner at Google Ventures in London, said in a interview. “There is an extreme focus on the customer. They are obsessed with the value of driving in a practical environment. Putting this on a platform that is secure and compliant is extremely difficult to do.”
It’s also interesting to see Atlassian investing in this round. The company has injected AI functionality into its various apps, and it seems only a matter of time before a platform like Jira could start adding more video tools to that mix, opening the door for a collaboration with its portfolio company.
