AI21 Labs, Competitor of OpenAI Raises Funding Worth USD 155M

Highlights:

• Natural language processing is a branch of artificial intelligence that is the focus of AI21 Labs, which is a research facility and a business.
• The startup aims to change and mold how people read and write by turning AI into a “thought partner” for people.

Generative AI startup AI21 Labs Ltd. is now equipped with cash after completing a significant USD 155 million Series C round of funding to support the expansion of its large language model-based services.

Several well-known investors participated in the round, including Professor Amnon Shashua, Walden Catalyst, Pitango, SCB10X, b2venture, Samsung Next, Google LLC, and Nvidia Corp. The capital round was completed over a year ago, in July 2022, after AI21 Labs closed on a USD 64 million Series B financing round. With the latest USD 283 million in funding, the company is now valued at USD 14 billion.

Natural language processing is a branch of artificial intelligence that is the focus of AI21 Labs, which is a research facility and a business. The company boasts prominent creators in its lineup, including Co-chief Executive Yoav Shoham, an Emeritus Professor at Stanford and a reputed entrepreneur who has successfully offloaded two companies to Google LLC. Additionally, there’s Amnon Shashua, a Hebrew University Professor and the founder of Mobileye NV, acquired by Intel Corp. for USD 15.3 billion in 2017. Also noteworthy is Ori Goshen, the initiator of the crowdfunding platform CrowdX Ltd.

The startup aims to change and mold how people read and write by turning AI into a “thought partner” for people. To that end, it has developed a number of NLP-based products.

Its apps are built on Jurassic-2, which AI21 Labs claims to be the most flexible and advanced LLM in the world. Businesses can use it to create sophisticated chat-based AI applications that can carry out various functions at a scale. Notably, Jurassic-2 powers AI21 Studio, a developer platform for creating custom, text-based applications; Wordtune, a multilingual reading and writing AI assistant; and Wordtune Read, which analyzes lengthy documents in seconds and generates a condensed summary.

Similar to ChatGPT, AI21 Labs has also created its chatbots. The Ask Ruth Bader Ginsburg AI bot is one of the most bizarre examples. It was developed using more than 27 years’ worth of public speeches, interviews, and other written content from the late US Supreme Court Judge of the same name.

According to the startup, Jurassic-2 offers a sophisticated starting point for businesses to create and hone their chatbots utilizing confidential data. Dutch, French, German, Italian, Portuguese, and Spanish are among the other languages it supports. Companies employing Jurassic-2 include the youth employment accelerator Harambee, which has developed a proprietary chatbot to increase program signups, and the video game development platform Latitude.io, which utilizes generative AI to expand the production of its gaming worlds.

According to Vice President and Principal Analyst Andy Thurai of Constellation Research Inc., AI21 Labs has an advantage over some of its competitors because the Jurassic-2 model is typically more accurate than other custom LLMs. “It’s comparatively cheaper to consume too, and its text generation and summarization capabilities, plus applications built on top of it, like Wordtune, are very good,” he added.

Shoham reported that the business will speed up its research and development initiatives with financing from the funding round to fulfill its objective of “developing the next level of AI.” Simultaneously, it wishes to pursue more partnerships with companies across the complete technology ecosystem and increase its current employee count of 200.

This year, generative AI firms have drawn enormous sums because of the growth of Open AI LP’s ChatGPT, which sparked a great deal of interest in the technology’s potential uses and productivity improvements.

One of the leaders in the field, OpenAI, was given a boost earlier this year by a USD ten billion investment from Microsoft Corp. Anthropic, a competitor of AI21 Labs and OpenAI, closed on a USD 100 million investment earlier this month from South Korean telecom giant SK Telecom Co. Ltd. This is just one of the notable raises. After raising USD 450 million in May, that followed. Cohere Inc. secured USD 270 million in June from Oracle Corp., Nvidia, and other backers.

Thurai asserted that the massive amount of money being raised by AI businesses at absurd valuations is not surprising. He cited the hype around LLMs and generative AI and the expense of gathering data, building models, and hosting them as contributing factors. To achieve momentum in the market, many AI businesses also offer low-cost hosting and training options for customers’ models. Therefore, they require considerable investment backing. “While AI21 spent only a fraction of what OpenAI has, it is still burning through a lot of money, and upkeep is not cheap. Hosting AI models can run into millions of dollars per year,” said Thurai.

Though there are several excellent open-source alternatives to OpenAI’s GPT and AI21’s Jurassic-2 models, Thurai said he is unsure if the money being invested in AI startups is sustainable. Thurai mentioned, “Examples include the LLaMa2 model created by Meta, and the Falcon model series, which are both very accurate.”

The analysts predict that the sector will eventually catch up with reality. “Sooner or later enterprises are going to figure out ways to train these open-source models themselves, or even create their own at much lower costs. Then the crazy valuations will come back down to Earth. But until that happens, enterprises will continue to use these services,” stated Thurai.

We anticipate investors continuing to fund AI startups for now, joining companies like Typeface Inc., which raised USD 100 million in June, and others like Inflection AI Inc., Runway AI Inc., and Stability AI Ltd.