AI21 Labs, an Israel-based startup developing large language models, has raised $155 million in Series C funding. This latest round, led by Walden Catalyst and Pitango, values the company at $1.4 billion.
The startup’s valuation multiple is reportedly at least 20 times its projected revenue for this year, a marker that, although optimistic, is more conservative compared to other AI startups with similar revenue streams.
The funding round drew participation from high-profile backers like Google, NVIDIA, and Samsung Next. It brings AI21's total raised to date to $278 million, and leaves it well-poitioned to be a important player in the generative AI space.
Founded in 2017, AI21 Labs aims to bring natural language processing capabilities to businesses. Its main product, AI21 Studio, provides developers with API access to its Jurassic-2 foundation models and task-specific language models to build custom text-based business apps.
AI21 is trying to set itself apart by strategically choosing to offer models that are not only smaller but also cheaper to run. Ori Goshen, one of the company's co-founders, remarked that “The size of the model is not everything,” adding that it’s more important for the model to give accurate information.
The new capital will support AI21's growth as it tries to take on rivals like Cohere and Anthropic. AI21 CEO Amnon Shashua acknowledged the increasingly competitive landscape, noting that new models are continuously emerging especially from the open source community.
AI21 plans to use the funding to expand its engineering team and scale its infrastructure. It also aims to tailor Jurassic-1 for vertical use cases like finance, law, and healthcare.
The round comes on the heels of AI21's launch of Contextual Answers, a plug-and-play AI engine for enterprise data. Contextual Answers allows businesses to upload entire libraries of documents – from knowledge bases and help center libraries to business reports, policies, and guidelines. It then offers a ready-to-use answering engine that provides responses entirely grounded in the uploaded data.
AI21's latest valuation of $1.4 billion reflects surging interest in generative AI following ChatGPT's viral success. However, it still lags behind valuations for rival AI startups like Anthropic ($5 billion) and Cohere ($3 billion).
Nonetheless, the fresh funding validates AI21's technology and strategy. With Jurassic-2, it aims to bring robust natural language capabilities to businesses looking to leverage generative AI's potential. This latest raise will fuel those efforts as competition intensifies.