Copy.ai Raises $2.9M to Enhance AI Writing Assistance

Copy.ai Secures $2.9 Million in Seed Funding

Copy.ai, a company developing AI-driven copywriting solutions for businesses, has announced the completion of a $2.9 million funding round. Craft Ventures spearheaded the investment. Additional participation in the financing included contributions from Atelier Ventures, a new venture fund established by Li Jin, and Sequoia.

Key Highlights of Copy.ai

The startup distinguishes itself through several key characteristics. Notably, it adopts a transparent “build in public” approach. Initial awareness of the company arose from its consistent monthly progress updates shared via Twitter.

These updates reveal that Copy.ai currently achieves a monthly recurring revenue (MRR) of $53,600. This represents a 46% increase since January, translating to an annual recurring revenue (ARR) of $643,200.

Transparency and Growth Metrics

Beyond financial figures, Copy.ai also publicly discloses its usage statistics. Interestingly, the company shares the growth in Twitter followers gained by its founder, Paul Yacoubian, each month.

Leveraging GPT-3 Technology

The company is also significant as part of a growing trend of businesses utilizing GPT-3, described by its creator, OpenAI, as an “autoregressive language model with 175 billion parameters.” Essentially, it’s an AI capable of generating text.

Investor Confidence in AI Startups

Several investors are demonstrating strong optimism regarding startups built on this technology. Matt McIlwain of Madrona recently asserted in TechCrunch that the arrival of GPT-3 in 2020 marked a pivotal moment for artificial intelligence.

He predicts this will catalyze “the launch of a thousand new startups and applications.”

A Growing Ecosystem

Early indications suggest this prediction is proving accurate. In addition to Copy.ai’s success, TechCrunch has reported on other startups capitalizing on GPT-3, including OthersideAi, which secured $2.6 million in November 2020, and Latitude, an “AI Dungeon-maker” that raised $3.3 million this February.

The Genesis of Copy.ai

However, shifting focus from its peers, let's examine the development journey of Copy.ai itself.

The Genesis of Copy.ai

Prior to establishing Copy.ai, Yacoubian engaged in venture capital and demonstrated a penchant for experimentation. He began exploring the capabilities of GPT-2 upon its release, noting to TechCrunch that while the tool frequently produced illogical outputs, it occasionally exhibited moments of remarkable insight. He found GPT-3 to be a substantial advancement, representing approximately a “50x” improvement over its predecessor in terms of generative quality.

Utilizing Twitter as a primary distribution platform – Copy.ai leverages social media metrics, making Twitter a key channel – Yacoubian and his co-founder, Chris Lu, initiated several pilot projects leveraging GPT-3. Simplify.so focused on text summarization, a Slack application was developed but remained internal, and taglines.ai was created to assist businesses in crafting slogans.

The latter project, taglines.ai, quickly gained initial momentum, attracting around 700 users within just two days. This user base proved sufficient, according to the co-founders, to justify the introduction of a monetization strategy. Subsequently, they determined that the core concept could be broadened to encompass a wider range of writing applications, aiding users with diverse writing tasks. This realization led to the formation of Copy.ai.

Currently, the platform is capable of generating content for various purposes, including blog posts, product descriptions, and headlines, all based on user-supplied keywords.

Interestingly, and somewhat contrary to the needs of many writers, Copy.ai doesn’t primarily aim to reduce word count. Instead, it produces multiple text variations, allowing the user to select the most suitable option. Yacoubian previously observed “flashes of brilliance” from GPT-2; GPT-3 enhances this capability, providing Copy.ai users with even more refined text options. The user then assumes the role of editor, choosing the preferred formulation and making any necessary adjustments.

Upon its launch in October 2020, Copy.ai rapidly acquired 2,000 sign-ups within its initial 48 hours, subsequently attracting interest from potential investors.

The founders then transitioned to working on Copy.ai full-time, leaving their previous employment. The company also pursued an unconventional funding approach, seeking investment from a large number of individuals – approximately 80, as described by Yacoubian.

This funding round was structured as a capped SAFE (Simple Agreement for Future Equity), a popular investment instrument favored by Y Combinator. SAFEs allow startups to raise capital without establishing a formal valuation, often incorporating a maximum valuation cap. Copy.ai adjusted its valuation cap as the fundraising process progressed.

David Sacks, founder of Craft Ventures, expressed his belief that “AI-powered natural language generation will fundamentally alter how marketing teams create copy,” and noted the “rare” speed of bottom-up adoption observed within the startup landscape.

I find myself genuinely intrigued by the potential of Copy.ai, not necessarily as a user – its application isn’t directly within my area of expertise – but due to my enthusiasm for GPT-3 as a technological innovation. The startup represents a practical experiment exploring the intersection of AI and writing, two areas of significant interest to me.

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