Barely 16 months old and Character.AI turns unicorn with Series A funding round

16-month-old Character.AI has toddled into the unicorn club after closing a $150 million Series A round at a $1 billion valuation. Andreessen Horowitz (a16z) led this funding round with participation from previous investors, including Nat Friedman (former GitHub CEO), Elad Gil, SV Angel and A Capital. Andreessen Horowitz General Partner Sarah Wang will join Character.AI's board of directors.

The funds raised allow Character.AI to continue its growth trajectory by expanding its computing abilities resulting in a more sophisticated model with advanced reasoning and greater accuracy, delivering new features and capabilities to users, and expanding its engineering team.

Founded in 2021 by AI and large language model experts Noam Shazeer and Daniel De Freitas, Character.AI focuses on conversational AI technology, which is all the rage currently. It allows users to create a fully customized and personalized AI companion with distinct personalities and values. 

"Whether a user is seeking a sympathetic ear or an analytical problem-solver, there's an AI at Character.AI to meet the unique needs of every person. For those less interested in complete personalization, the growing community of creators at Character.AI have developed millions of AI characters for people to connect and use," the company claimed in a statement.

"Character.AI is rapidly and dramatically advancing generative AI, with the potential to transform how humans connect not just with AI, but more broadly reinvent how we interact with technology as a whole in our everyday lives," said Sarah Wang, general partner at a16z. "Noam and Daniel have been trailblazers in AI for nearly two decades, and we're excited to support them in the next chapter of their journey. They've built a powerful platform, with an end-to-end combination of both model and application that allows Character.AI to continuously improve its product as more people create and engage with its characters."

Shazeer added, "Character.AI's power is our highly-sophisticated language model, which rapidly analyzes and contextualizes large volumes of information to produce useful intelligence tailored to each individual, making it a personalized superintelligence companion that enhances productivity, offers advice, educates, and entertains. The potential use cases are infinite."

Since the platform's beta launch in September 2022, Character.AI claimed it had experienced close to 100 million monthly site visits, a four-fold increase in two months. It has also witnessed an average time on site of more than two hours per day for users who send a message. Users sent more than two billion messages since launch, with the first one billion user messages sent in four months.  

Character.AI has also released an early preview of C1.2, its new model, which introduces improved productivity capabilities, building on the entertainment, roleplay and emotional support of the C1.1 model. C1.2-powered Characters can help draft emails, assist with test prep by being a study buddy, brainstorm ideas and much more.

"For years, we've known the potential and power of conversational AI, and it's incredibly rewarding to see people from around the globe use Character.AI for a huge variety of use cases. We understand the importance of providing an AI that truly feels like your own," added the start-up's co-founder, De Freitas.  

AI-enabled chatbots that use large language models are enjoying their time in the spotlight after OpenAI's ChatGPT caught the world's attention. Students to professionals are using it increasingly, either out of curiosity or to ease their work, and the technology is pipped to relegate many existing jobs to history. Reuters recently reported that PricewaterhouseCoopers has partnered with AI start-up Harvey to give 4,000 lawyers access to introduce generative AI technology for their legal work. 

This growing interest in AI use has also caught the attention of investors. Recently, Mozilla, the company behind the Firefox browser stated it was launching an AI-focused start-up, Mozilla.ai. This will be funded by a $30 million seed investment from the Mozilla Foundation. 

Google has upped the game with its experimental conversational AI service called Bard. The tech major recently backed Anthopic's Claude, an AI chatbot co-founded by ex-Open AI employees Dario and Daniela Amodei, with $400 million in funding.

Reuters also reported that Unlearn.AI, a machine learning platform that creates digital twin profiles of patients in clinical trials, raised $15 million from Radical Ventures and Wittington Ventures at a $265 million valuation.