Google is reportedly in discussions to advance talks to invest hundreds of millions of dollars in Character.AI, an emerging AI chatbot startup aiming to secure funding for model training and meet rising user demands.
Founded by former Google employees Noam Shazeer and Daniel De Freitas, Character.AI lets users interact with virtual celebrities and create personal chatbots. The platform, free to use, offers a $9.99/month subscription for expedited access to chatbots. Currently seeking capital, Character.AI aims to train models and meet growing user demand.
The possible investment, potentially in convertible notes, is aimed at strengthening the ongoing partnership between Character.AI and Google. This would involve utilizing Google's cloud services and Tensor Processing Units (TPUs) for effective model training. Both companies have not commented on the matter in response to requests.
Character.AI's chatbots, offering diverse roles and tones, have attracted users aged 18 to 24, constituting around 60% of its website traffic, as per Similarweb data. This demographic focus positions the company as a provider of entertaining personal AI companions, distinguishing itself from other AI chatbots like OpenAI's ChatGPT and Google's Bard. The company previously said its website had attracted 100 million monthly visits in the first six months since its launch.
Character.AI is reportedly in discussions to secure equity funding from venture capital investors, potentially placing the company's valuation at over $5 billion, according to sources. Notably, in March, the company raised $150 million in a funding round led by Andreessen Horowitz, achieving a valuation of $1 billion at that time.
The discussions with Google regarding the investment in Character.AI are ongoing, and the terms of the deal might undergo changes, according to sources requesting anonymity due to the private nature of the discussions.
Google has been actively investing in AI startups, allocating $2 billion to model maker Anthropic through convertible notes, alongside a prior equity investment. Anthropic utilizes Google's cloud services and the latest Tensor Processing Units (TPUs). Major tech cloud service providers, including Google, are increasingly forming partnerships with AI companies, encouraging them to utilize specific cloud infrastructure or hardware for the challenging process of building and deploying models.
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