Report: Character.AI Plans New Funding Round to Build Revenue Cushion

Artificial intelligence (AI) startup Character.AI is pursuing another funding round.

That’s according to a report Saturday (July 15) by The Information, which cited a source with direct knowledge of Character.AI’s plans.

The company announced earlier this year it had raised $150 million at a $1 billion valuation. Character.AI’s large language model technology lets users chat with AI-powered versions of fictional and historical characters and celebrities.

(A quick review of the company’s character line-up shows users can talk with AI versions of Elon Musk, Nintendo’s Mario, the late Michael Jackson and “Breaking Bad”/“Better Call Saul” attorney Saul Goodman.)

The report noted that the new funding could offer Character.AI more leeway as it tries to increase revenue by offering paid perks with a subscription.

Character.AI was founded by veterans of Google’s AI project DeepMind, as PYMNTS reported last week. PYMNTS has contacted the company for comment but hasn’t received a reply.

The news comes at a time when — as noted here last week — there are more generative AI platforms in the market than ever.

Both Meta and Musk announced the launch of their own AI platforms, joining rivals like Microsoft and OpenAI, as well as upstarts like Anthropic and other startups.

“But don’t let the crowded and increasingly competitive AI field fool you,” PYMNTS wrote. “[S]ignificant capital investment, industry-leading technical expertise, and above all, intensively expensive large-scale compute infrastructure built atop rows of increasingly scarce GPUs are all needed to establish and maintain generative AI models, much less jockey for position with some of the largest and most valuable businesses in human history.”

Because, that report added, newly created AI models need to then be commercialized and scaled once they’ve been built.

That report argues that one way to look at this wave of AI platforms is to frame them as a 21st century version of the explosion of web browsers that happened at the end of the last century.

“Browsers like Firefox, Chrome and Safari — or more historically appropriate, Mosaic, Netscape, Internet Explorer, Opera and more — all offered a somewhat commoditized experience, that of an on-ramp to the information economy of the time, and so had to distinguish themselves through varied user experiences, brand positioning and other features such as open-source architectures,” PYMNTS wrote.