Nvidia-backed platform that turns text into AI-generated avatars raises valuation to $1 billion

Synthesia, a digital media platform that allows users to create AI-generated videos, has raised $90 million from investors including US chip giant Nvidia, the company told CNBC exclusively.

The London-based company raised the money in a funding round led by Accel, an early investor in Facebook, Slack and Spotify. Nvidia came in as a strategic investor, investing an undisclosed amount of money. Other investors include Kleiner Perkins, GV, FirstMark Capital and MMC.

Founded in 2017 by researchers and entrepreneurs Victor Riparbelli, Matthias Niessner, Steffen Tjerrild and Lourdes Agapito, Synthesia develops software that allows people to create their own digital avatars to deliver company presentations, training videos or even compliments to colleagues in over 120 different languages .

Its ultimate goal is to eliminate cameras, microphones, actors, lengthy edits, and other costs from the professional video production process. To do this, Synthesia created animated avatars that look and sound like humans, but are generated by artificial intelligence. The avatars are based on real-life actors speaking in front of a green screen.

“Productivity can be improved because you’re reducing the cost of producing video to that of making a PowerPoint,” Accel’s Philippe Botteri, the lead investor in Synthesia’s C-series, told CNBC, adding that video adoption is been proliferated by consumer platforms such as YouTube, Netflix and TikTok.

“Video is a much better way to communicate knowledge. When we think about the company’s potential and valuation, we think about what it can give back, [and] in the case of Synthesia, we’re just scratching the surface.”

Synthesia is a form of generative AI, similar to OpenAI’s ChatGPT. But the company says it’s been working on its own proprietary generative AI for years, and that while ChatGPT may have only recently emerged into the public consciousness, generative AI itself isn’t a new technology.

Synthesia sells to corporate clients, including Tiffany’s, IHG and Moody’s Analytics. The company doesn’t disclose its sales or revenue metrics, though it says it has “consistently driven triple-digit growth,” with more than 12 million videos produced on the platform to date. The number of users on Synthesia has increased 456% year over year, the company said.

Synthesia plans to increase investment in its technology, with a focus on advancing its AI research and making Synthesia avatars capable of multitasking.

“We work with 35% of the Fortune 100 [with a focus on] product marketing, customer service, customer success areas of the business you have a lot of text that you want to turn into video,” Riparbelli told CNBC.

“As we’re progressing into the next phase of the next generation of Synthesia technology, it’s about making avatars more expressive, being able to do more things, walk around a room, have conversations,” he added.

Riparbelli explained that Nvidia isn’t just a semiconductor maker, it’s also a powerhouse of R&D talent with an army of engineers, academics and researchers producing papers on the subject.

“I’m not just a chip maker,” he said. “They have amazing research teams that are very cutting edge in terms of, how do you actually train these large models? What works, what doesn’t work?”

Business Insider previously reported that Synthesia was in talks with investors to raise between $50 million and $75 million in new funds at a valuation of about $1 billion.

The report did not include details of Nvidia’s involvement, nor did it mention the total sum of $90 million raised.

Synthesia is one of many companies attracting investor interest with AI and business software that can reduce costs involved in certain business processes. Companies are trying to cut expenses wherever possible to fight rising inflation and prepare for a possible recession.

Last week, French business planning software company Pigment raised $88 million from investors including Iconiq Growth, Felix Capital, Meritech IVP and FirstMark, in part to boost its investments in artificial intelligence.

Generative AI has been a rare bright spot in a European tech market reeling from declining funding and declining valuations. Investors have moved from high-growth technology companies to value sectors with more resilient income generation, such as financials, industrials, energy and consumer staples.

Recently, a report from venture capital firm Atomico showed that funding for European tech startups was on track to decline a further 39% in 2023 to $51 billion from $83 billion in 2022.

Still, AI has been an area attracting the most investment, Atomico said, with generative AI accounting for 35 percent of total investment in AI and machine learning companies last year, the share highest ever and a big jump from 5% in 2022.

There are concerns that the use of advanced video AI tools such as Synthesia could lead to deepfakes, videos that take the appearance of a user and manipulate them into appearing as if they are saying or doing something they are not saying.

There have also been a growing number of calls from technology and academic leaders for a global pause on AI development beyond systems such as OpenAI’s GPT-4, due to fears that the technology is becoming so advanced that it could represent a existential risk to humanity.

Synthesia first gained mainstream attention in 2019 for a deepfake video that featured a digitally animated version of famous footballer David Beckham speaking about a campaign to end malaria in nine languages.

While this was done with Beckham’s consent and for a good cause, the more widespread use of deepfake technology has led to concerns about the potential for misinformation.

To address this issue, Synthesia says it kept ethics in mind when developing its software. The company requests consent from people who appear as avatars in its software and uses a mix of humans and machine learning to target material such as profanity and hate speech.

He is also a member of Responsible Practices for Synthetic Media, an industry-wide voluntary framework for the responsible and ethical development, creation and sharing of synthetic media.

“There are a lot of different talks going on right now. There’s one about very long-term existential risk scenarios. I think it’s important to talk about them as well. But I’d like to see more focus on where we are today?” Riparbelli told CNBC in an interview.

“These technologies are already powerful. How do we deal with hallucinations? How do we deal with any problems that arise?” she added. “There are definitely pitfalls. But there are also so many opportunities, I think, leveling the playing field and enabling people to do so much more with less.”