Increased capital is flowing into AI-focused firms. DeepL, a company that creates writing and text translation software to rival services like Grammarly and Google Translate, announced on Wednesday that it had raised an extra $300 million. $2 billion is its current post-money valuation.
This round, which was spearheaded by Index Ventures, demonstrates the fervent interest that investors currently have in AI firms and the ways in which these businesses are seizing the opportunity. When DeepL raised somewhat more than $100 million in January 2023, its valuation—which is still unprofitable—was estimated at $1 billion.
The additional funds will be put toward expanding research and development as well as increasing sales and marketing.
According to the Cologne, Germany-based company, over 100,000 companies and organizations use its products. Attempting to scale it greatly is the goal, since it represents a very small portion of the company’s addressable market.
In an interview earlier this month, CEO and founder Jarek Kutylowski stated that the company has so far developed primarily organically and that it intends to increase sales and marketing activities in order to attract new clients and broaden its offerings to existing ones.
That brings up a crucial point for AI startups that want to work with other businesses: despite the fact that a lot of leaders are pushing their teams to develop AI plans for their company, a lot of projects haven’t made it past the pilot or small deployment stage. Increasing that will be crucial for AI technology providers.
He remarked, “Inbound is great, but we want to develop a stronger relationship with our customers,” “We’re working hard on developing a better outbound function, because inbound is only going to get you so far. At some point, you have to start solving the problems together with your customers. The company’s transforming quite a bit into this enterprise direction, which is complicated and interesting for a research based company.”
Kutylowski stated that now, roughly 60% of the company’s workforce consists of technologists, and going forward, it plans to add additional non-technical employees. One of DeepL’s main problems will be to strike a balance between that and a research-focused approach.
Currently, the firm offers support for 32 languages, and it has been gradually adding new products to its line. The most recent addition to the list is heavily centered around businesses: As “a writing assistant specifically tailored for business,” DeepL Write Pro is defined. According to the statement, DeepL’s customers include Zendesk, Nikkei, Coursera, and Deutsche Bahn.
“Companies want to have control over how their employees speak, right?” stated Kutylowski.
But a wide range of businesses could pose a serious threat to DeepL: some are experts in the same field, and platform giants like Google, Amazon, and Microsoft already operate in fields like translation and are aiming to improve them even more with artificial intelligence.
While not as far along as DeepL, some of the more established, more recent AI startups, such as OpenAI and Anthropic, clearly have room to grow. DeepL cannot rest on what it claims to be its leadership position today because some of these firms may not be concentrating on translation and writing improvements just yet. However, making AI feel more seamless and “human” will continue to be a priority.
Participating in the round were ICONIQ Growth, Teachers’ Venture Growth, and prior investors IVP, Atomico, and WiL.
“DeepL’s runaway success is a bit of an ‘open secret’ in the business community,” according to Danny Rimer of Index Ventures. “The company is exceptionally thoughtful about creating cutting-edge AI products that deliver real and immediate value to their customers.”