Companies that want to build AI voice into their products are rushing to work with ElevenLabs, the startup that develops synthetic voice technology like voice cloning and dubbing tools. Now ElevenLabs is turning up the volume on its business with a huge series C raise, just a year after a sizable series B.
The New York startup has closed a Series C of $250 million at a valuation of between $3 billion and $3.3 billion, multiple sources tell TechCrunch. The round is being led by ICONIQ Growth, several people said. Andreessen Horowitz, one of the lead investors in the company’s $80 million Series B in January, 2024, was another name mentioned as a potential investor in this round. ElevenLabs, ICONIQ Growth and Andreessen Horowitz did not respond to our request for comment.
For months, investors have been scrambling to invest in ElevenLabs after a blockbuster period of growth for the company, with its AI audio technology getting used everywhere, TechCrunch was the first to report in October.
On the back of a strong funnel of business, sources tell us that ElevenLabs was initially looking for funding at a $4 billion valuation. But a $3 billion valuation is still triple the unicorn valuation that the company landed with that year-ago Series B. One source said the company has been preparing to announce the round this month so official confirmation may come any day now.
ElevenLabs’ fundraise comes after a strong few years both for the company and the wider industry. The company was founded in 2022 by Mati Staniszewski and Piotr Dabkowski who respectively previously worked at Palantir and Google. Childhood friends from Poland, the pair were inspired by the poor quality of dubbing in the American videos they watched growing up, and they saw an opportunity to use AI to develop something better.
Their idea was a clear example of right idea-right time. As generative AI services have become more advanced, multimedia has come to the fore, and there has been a growing interest in building applications that include sound and video alongside GenAI text services.
ElevenLabs released its first beta product in January 2023, and by the time it had raised its Series A of $19 million in June 2023, it had gone viral.
Some of that growth has not been without controversy, with stories of fake news being created with its tech. But as ElevenLabs has developed a raft of detection tools and other safeguards to prevent misuse, it has emerged as a key partner for enabling speech-based services for an increasingly high-profile number of businesses.
Its technology, usable via an API and priced at a number of usage tiers, covers a wide range of use cases: translating text to speech (in multiple languages), cloning voices, changing voices in an audio track, creating entirely new voices; alongside other voice editing tools.
Customers include other technology platforms such as Syntheisa, the text-to-video startup that works with businesses and itself announced a fundraise of $180 million earlier this month; publishing giants like Washington Post, Harper Collins and Bertelsmann, which says 36 businesses are using ElevenLabs’ tech in their content creation; and gaming companies, among others.
Usage has led to a rapid rise in sales. In October, sources told us that ElevenLabs’ annualized recurring revenue (ARR) had grown from $25 million in 2023 to $80 million. Two people in November estimated that its ARR was likely closer to $90 million. If the latter figure is accurate, a $4 billion valuation would have put its valuation multiple at 44 times ARR; in the end it seems the deal has been done at a slightly more moderate multiple of 37 times ARR.
For some context on that number, these are not the most exuberant valuations at the moment: investors appear willing to pay as much as 50 times ARR for the fastest-growing generative AI companies.
Anysphere, the maker of a popular AI-coding assistant Cursor, has received multiple unsolicited offers valuing the company at about $2.5 billion, which translates to about 52 times ARR, TechCrunch reported in November. The company has seen its revenue grow from $4 million annualized recurring revenue (ARR) in April to $4 million a month as of last month. (ARR is commonly calculated by multiplying the latest monthly revenue by 12.) However, by the time the deal, which was led by Thrive at a valuation of $2.5 billion, was announced earlier this month, Anysphere had reached $100 million in ARR, The New York Times reported. That implies that the company was valued at 25 times ARR.
ElevenLabs’ more temperate multiple may be a function of the company’s competitors, which include a plethora of startups but also giants like Google and OpenAI.
Other past backers of the company have included Sequoia, Credo Ventures, Concept Ventures, Salesforce Ventures, Disney, and nearly two dozen high-profile angel investors.