Venice AI becomes a unicorn with a $65M Series A as its first AI platform launches

Concerns about the impact of AI chatbots on mental health, personal safety, abuse, and misinformation have forced AI developers to implement safeguards to better control what their AI models are allowed to respond to or do.

But anxiety and worry cannot eliminate the need. AI offers a lot of promise, and people don’t want a flawed technology company to limit their access to what’s possible. And if they can maintain their privacy while using AI models however they want, why not?

Venice AI, which provides access to more than 200 AI models while allowing users to maintain their privacy, is rising because of that need. In just two years, the company already has more than 850,000 unique visitors to its website, and serves more than 3 million active users and an average of 1.7 million API calls per day.

The startup handles “untested,” open-source models in its data centers, as well as routing queries to closed-source models, such as those of OpenAI or Anthropic. All user input is encrypted and unencrypted on the client side, and is transmitted to an external proxy before being processed and returned, except for data stored on Venice’s own systems. It also offers end-to-end encryption on some models, although you have to pay a subscription to get that feature.

The company is already profitable, with annual revenue of more than $70 million, CEO Erik Voorhees (pictured above, center) told TechCrunch during an exclusive interview.

Understandably, investors have flocked to get a piece of that route. Venice AI on Wednesday said it raised a $65 million Series A at a value of about $1 billion, its first foreign fund. The round was led by crypto-focused venture firm Dragonfly, with participation from Coinbase Ventures, North Island Ventures, and others.

The overlap between Voorhees, Venice’s focus on privacy, and its new crypto investors is hard to miss, especially given the CEO’s background and previous work. An early advocate of bitcoin, Voorhees has founded several crypto companies, including bitcoin gambling site Satoshi Dice and cryptocurrency exchange ShapeShift, and has long advocated for user privacy.

In fact, when a Wall Street Journal investigation accused ShapeShift, which initially did not require its users to identify themselves, of processing millions of suspects’ money, Voorhees reportedly said: “I don’t think people should have their identities written down to catch the occasional criminal.”

He struck a similar chord when asked how Venice AI thinks about providing access to AI models in light of recent cases of AI psychosis and resulting injuries, saying that his team treats their service as “a neutral tool or a neutral platform.”

“This is the same principle that you have in Bitcoin, where Bitcoin, as a neutral protocol, works the same for all people,” he said. “I think it’s really dangerous in terms of safety, for the world to go into this next phase and everybody looks like that. To me that’s more dangerous than anyone asking a controversial question or something that might be considered negative.”

There’s a big focus on giving users agency, too. Users can freely choose from AI models that can generate text, images, audio, and video — all of which differ in their performance, quality, and the amount of research used. The website prominently features several AI “characters” that you can customize and interact with, and the company proudly claims that it provides “untested” information.

“We’re preparing for freedom and actually respecting users as adults, which is, I think, rare these days,” Voorhees said.

The founder said that Venice is also working on an open model system to instruct them to respond freely, although it does not add any restrictions to the models.

Surprisingly, there are two crypto tokens associated with the effort. Venice launched a token called “VVV” in early January, with the aim of attracting users, Voorhees said, and in August last year added another, called “DIEM.” Users can buy VVV and stake it for DIEM, which generates AI credits worth $1 per day to spend in Venice. However, Voorhees said that only 8% of the company’s users pay in crypto.

The founder pointed to the company’s growth in the efficiency of crypto tokens, although he said that the most powerful driver is approaching the balance of the feature with ChatGPT. “When we launched, we were very far from what ChatGPT could do, but people used it because it was private. And today, we are very close to what ChatGPT can do.” […] therefore, now that we have closed that gap, it has become another compelling opportunity,” he said.

Looking ahead, Venice AI wants to use the new capital to start buying GPUs and building out its data centers so it can stop renting GPUs and increase its gross margins.