As the world goes on work through how rod explosion of deep online content, it seems that not all AI-generated videos are stirring up controversy. Synthesisa London startup building products around highly realistic AI avatar technology, says it’s a big hit with businesses, with about 60,000 of them – 1 million users – tapping into technology to create avatar-based videos from text documents, for sales and marketing, for training and more.

Now VCs also want to get in on the action. Synthesia confirmed today that it has closed a funding round of $180 million, a Series D that catapults the company’s valuation to $2.1 billion. NEA led the round, with participation from new investors WiL (World Innovation Lab), Atlassian Ventures, and PSP Growth, along with previous backers GV and MMC Ventures. Synthesis has raised $330 million to date.

The startup plans to use the funding for hiring, especially to expand in Asia Pacific – most of Synthesia’s business is currently in Europe and North America – and to continue developing its products.

“We’re doubling down on all the things we’ve already done right,” said CEO and co-founder Victor Riparbelli, in an interview. “We want to make our avatars better.” He said the company’s “long roadmap” includes a more realistic move; to be able to port avatar to different environments; avatars that can interact with objects, for example, give physical demonstrations; and avatars that users can interact with. It will also eat some of its own dogfood by creating more “agents” to help customers create avatar-based content more easily.

One area where it is not chasing activity is in M&A. Synthesia has so far made no acquisitions and Riparbelli says it wants to build its technology in-house, along with using APIs for what it doesn’t build itself. For example, it works with Eleven Labs for voice, and it taps and fine-tunes various third-party Large Language Models instead of building its own.

The Synthesis phase has been in the works for at least a few months: The Information reported that it will raise $150 million by November 2024. For a little more fundraising context, it’s been about 18 months since Synthesia last disclosed funding: in June 2023, it closed a $90 million round at a $1 billion valuation with previous backers including Kleiner Perkins and Accel.

In the interim, AI companies have become a huge magnet for VCs, providing a bright place in a relatively tight funding landscape. AI startups accounted for more than 37% of the $368.5 billion invested in all startups by 2024 worldwide, according to PitchBook data. In the US the proportion is even greater, with AI startups getting almost 50% of the $209 billion invested last year.

Synthesia says it now has 60,000 businesses as customers, compared to 50,000 in June 2023, and its goal is to carve its own niche in the space as the go-to platform for businesses looking to to build their video interactions.

This was done at a time when advanced AI video functionality was becoming more common. There are startups working on the ability to extrapolate complete product videos from basic documents, while others refer to construction avatar capable of real-time interactions and real-time video assistants. Some claim to be able to create life-like avatars of their users from just a one minute video. (A simple test to see how big the market is here is to put Synthesia into Google, and see how many companies are buying search ads against its name. There are a lot.)

Synthesis is not immune to the product race. It has been building a “2.0” version of its platform for a while now and has released several related features, including its own take on personal avatars which users can do with a laptop camera or feature phone emotions; a Chrome extension which builds basic videos based on screen data; one’s own version AI video assistant that can convert documents to videos; multi-language options; and collaboration features for people to edit a video together.

More to the point, though, Riparbelli believes the company has an edge by focusing itself on business users, and investors say that’s what makes the startup attractive.

“Synthesia is one of only a few AI companies that can really cut through AI and actually translate things into real-world applications,” said Vidu Shanmugarajah, a partner at Google Ventures in London, in a interview. “It has an intense customer focus. They are amazed at the value of driving in a practical situation. Combining that with a platform that is safe and compliant is very difficult to do.”

It would be interesting, too, to see Atlassian invest in this round. The company has been injecting AI functionality into its various apps, and it seems only a matter of time before a platform like Jira could start adding more video tools to the mix, – open. the door for a collaboration with its portfolio company.