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Report: Character.AI Seeking Funding at Valuation Exceeding $5 Billion

Character.AI

Character.AI, a startup focused on generative artificial intelligence (AI) and chatbot technology, is reportedly in discussions to raise funding that could value the company at over $5 billion.

The startup has garnered significant interest from investors and has achieved noteworthy milestones since securing $150 million in funding earlier this year, Bloomberg reported Thursday (Sept. 28), citing unnamed sources. However, the talks are still in the early stages and may not come to fruition.

A company spokesperson told PYMNTS: “As our community of users continues to rapidly grow, so does interest in being part of the revolutionary technology we are building and delivering. While we continue to have productive conversations, any speculation about our fundraising or valuation is just that.”

Founded by former Google employees Noam Shazeer and Daniel De Freitas, Character.AI offers a service that enables users to create chatbots capable of engaging in text conversations, according to the report. For example, users have already sent millions of messages to characters like Super Mario, based on the Nintendo 64 character, and received AI-generated responses.

The potential funding deal could value Character.AI between $5 billion to $6 billion, with initial conversations even considering a valuation of up to $10 billion, the report said. This would mark a substantial increase from the company’s previous funding round, which valued it at $1 billion.

Character.AI is still in its early stages, having been established in 2021, and the startup’s business model may evolve over time, per the report. Earlier this year, the company introduced a subscription service called c.ai+, which offers users faster access to its messaging service for a monthly fee of $10.

It was reported in July that new funding could offer Character.AI more leeway as it tries to increase revenue by offering paid perks with its subscription service.

The firm is one of several in the AI field that have helped move generative AI from the ivory tower and business laboratory to the everyday lives of hundreds of millions of users.

In a recent funding round, generative AI service provider AI21 Labs raised $155 million and was valued at $1.4 billion. In another, generative AI platform Typeface raised $165 million and was valued at $1 billion.