ElevenLabs Raises $3B+ in New Funding Round - Details

ElevenLabs Secures $250 Million in Series C Funding

A surge in demand for artificial intelligence voice technology is driving companies to collaborate with ElevenLabs, a pioneering startup specializing in synthetic voice solutions, including voice cloning and dubbing capabilities. The company is now amplifying its business operations with a substantial Series C funding round, occurring just one year following a significant Series B investment.

Funding Details and Valuation

Sources indicate that the New York-based company has successfully closed a Series C funding round of $250 million. This valuation places ElevenLabs between $3 billion and $3.3 billion. ICONIQ Growth is leading the investment round, according to multiple reports.

Andreessen Horowitz, a key investor in ElevenLabs’ $80 million Series B round from January 2024, is also speculated to be participating in this current round. Neither ElevenLabs, ICONIQ Growth, nor Andreessen Horowitz have yet responded to requests for comment.

Investor Interest and Initial Valuation Goals

For several months, investors have actively sought opportunities to invest in ElevenLabs, fueled by the company’s remarkable growth trajectory. Its AI audio technology is now widely implemented across various applications, as first reported by TechCrunch in October.

Initially, ElevenLabs aimed for a $4 billion valuation. However, a $3 billion valuation still represents a tripling of the company’s valuation from its year-ago Series B. An announcement regarding the round is anticipated in the coming days, according to one source.

Company Origins and Growth

ElevenLabs was founded in 2022 by Mati Staniszewski and Piotr Dabkowski, both formerly employed at Palantir and Google, respectively. The founders, who are childhood friends from Poland, were motivated by the subpar quality of dubbing in American videos they watched during their youth.

They identified an opportunity to leverage AI to create a superior solution. This proved to be a timely and insightful concept, coinciding with the rapid advancements in generative AI and a growing focus on multimedia applications incorporating sound and video alongside text-based GenAI services.

Rapid Adoption and Viral Growth

The company launched its initial beta product in January 2023 and quickly gained viral traction. By June 2023, when it secured its Series A funding of $19 million, its popularity had significantly increased.

While this growth hasn't been without challenges – including concerns about the creation of fake news using its technology – ElevenLabs has proactively developed detection tools and safeguards to mitigate misuse. This has solidified its position as a crucial partner for businesses seeking to implement speech-based services.

Technology and Applications

ElevenLabs’ technology, accessible through an API with tiered pricing, supports a diverse range of applications. These include text-to-speech conversion (in multiple languages), voice cloning, voice alteration within audio tracks, the creation of entirely new voices, and other voice editing functionalities.

Notable Customers

The company’s customer base includes technology platforms like Syntheisa, a text-to-video startup that recently raised $180 million. It also serves publishing giants such as Washington Post, HarperCollins, and Bertelsmann, with 36 businesses currently utilizing ElevenLabs’ technology for content creation. Gaming companies are also among its clientele.

Financial Performance

This widespread adoption has translated into substantial revenue growth. In October, reports indicated that ElevenLabs’ annualized recurring revenue (ARR) had increased from $25 million in 2023 to $80 million. November estimates suggested an ARR closer to $90 million.

A $4 billion valuation would have represented a multiple of 44 times ARR. The final deal appears to have been completed at a more moderate multiple of 37 times ARR.

Valuation Context

This valuation is considered reasonable within the current market landscape. Investors are reportedly willing to pay up to 50 times ARR for rapidly expanding generative AI companies.

For comparison, Anysphere, the creator of the AI-coding assistant Cursor, received unsolicited offers valuing the company at approximately $2.5 billion, equating to around 52 times ARR. However, Anysphere’s ARR subsequently grew to $100 million, resulting in a valuation of 25 times ARR.

Competitive Landscape

ElevenLabs’ more conservative valuation multiple may be attributed to the competitive environment, which includes numerous startups as well as established tech giants like Google and OpenAI.

Past investors in the company include Sequoia, Credo Ventures, Concept Ventures, Salesforce Ventures, Disney, and a diverse group of nearly two dozen prominent angel investors.