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Generative AI startup AI21 Labs raises cash in the midst of OpenAI chaos

One AI startup’s undoing is another’s opportunity.

Case in point: today, AI21 Labs, a company developing generative AI products along the lines of OpenAI’s GPT-4 and ChatGPT, closed a $53 million extension to its previously-announced Series C funding round. The new tranche, which had participation from new investors Intel Capital and Comcast Ventures, brings AI21’s total raised to $336 million.

The startup’s valuation remains unchanged at $1.4 billion.

Ori Goshen, AI21 Labs’ co-founder and CEO, said that the cash infusion will be put toward product development and growing the startup’s headcount. (Perhaps a few of those new hires will come from OpenAI, given the string of departures there — if they don’t jump ship for Microsoft.)

“We’re extremely grateful for the support of our investors who believe in our deep technology expertise,” Goshen said in a press release. “Mass deployment of AI requires deep understanding of high-performance language models that can deliver better value and impact. Our approach is about designing AI with purpose, making it significantly more efficient than building from scratch, and much more cost effective.”

A Tel Aviv-based startup creating a range of text-generating AI tools, AI21 Labs was founded in 2017 by Mobileye co-founder Amnon Shashua, Goshen and Yoav Shoham, the startup’s other co-CEO. AI21’s flagship product is AI21 Studio, a pay-as-you-go developer platform for building custom text-based business apps off of AI21’s proprietary text-generating AI models. The startup also sells access to Wordtune, a multilingual reading and writing AI assistant akin to Grammarly.

Customers can tap AI21 Labs’ platform via APIs for specific generative AI use cases, like summarization, paraphrasing and grammar and spelling correction. The startup’s models support a growing number of languages, including Spanish, German, Italian and Dutch.

A21 Labs competes with the embattled OpenAI as well as other well-funded startups in the generative AI space, including Cohere and Anthropic (and to a lesser extent marketing-focused vendors such as JasperRegie and Typeface). Google, AWS and Microsoft also offer tooling comparable to AI21 Studio.

Shoham argues that AI21 is differentiated by its “more comprehensive systems approach,” however.

“Our AI enriches [generative AI] with knowledge and reasoning in addition to statistical inference,” he said in an emailed statement. “This enables us to define a flexible architecture with multiple generative AI, complemented by discrete knowledge and reasoning modules.”

The extent to which that’s truly differentiating is up for debate; some vendors would argue that they’re adopting similar techniques and tech. But one thing’s for certain: AI21 has tangible customer momentum behind it. Goshen claims that A21 counts “several” Fortune 100 companies among its client roster and that Wordtune alone has over 10 million users.

Partnerships with Dataiku and Amazon, particularly around the launch of the latter’s Bedrock generative AI dev platform, perhaps helped.

“AI21 [is increasing] mindshare that one size doesn’t fit all, as enterprises look for unique partners that understand their specific needs,” Goshen said.

Worth noting is that A21 Labs is Intel’s second major public generative AI investment to date, the other one being Stability AI. It’s no accident, surely, that Mobileye’s owned by Intel and that Shashua’s been on Intel’s payroll for some time. But I also wonder if Intel’s feeling the pressure from rival chipmakers — namely Nvidia, which has benefited enormously from the AI boom — to step up its game in this area. It wouldn’t surprise me.

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