Voice cloning AI startup ElevenLabs was worth $100 million five months ago. Now, sources say it’s about to hit $1 billion.

• AI startup ElevenLabs is in the process of raising its third funding round of 2023, sources say.
• The startup is in talks with US giants Andreessen Horowitz and Sequoia.
• A prospective deal could value the voice-cloning company at $1 billion.

ElevenLabs, a voice-focused generative AI startup, is in talks to raise capital in a deal that would increase its valuation to $1 billion.

The London and New York-based startup, founded last year by ex-Google and Palantir employees, has received term sheets from existing investors Andreessen Horowitz and VC behemoth Sequoia for its third funding round in 2023, according to three sources familiar with the matter.

It is unclear whether Sequoia will invest alongside Andreessen Horowitz or whether they will compete.

The transaction is not yet finalized, and details such as valuation and participants may still change. Sources spoke to Insider on the condition of anonymity because the terms of the transaction are still confidential.

ElevenLabs employs artificial intelligence to convert text into speech, recreating human voices in the process. To clone someone’s voice, the tool only requires a few minutes of audio of them speaking. After that, users can dub that voice to speak in one of 29 different languages.

The startup has touted use cases such as video narration or non-playable character dialogue for video games, but voice cloning has already been used for more deceptive purposes, which has caused the company problems.

ElevenLabs’ technology gained attention in January after Vice reported that it had been used to voice hateful comments in the voices of celebrities such as Joe Rogan and Emma Watson.

Since then, the company has released a deepfake detection tool. It has also added new controls to ensure that users can only recreate their own voice by having them read a captcha prompt that is then compared to the sample submitted, according to Gizmodo.

In June, the company raised a $19 million Series A round, valuing the company at $100 million. Five months later, the potential new round will more than tenfold that valuation to $1 billion, according to three sources.

A request for comment from ElevenLabs and Andreessen Horowitz was not returned. When Insider contacted Sequoia, the company declined to comment.

Such a transaction would represent an extraordinary rate of growth for an early-stage startup, propelling it past a unicorn valuation faster than tech behemoths like Meta and Airbnb.

However, such rapid increases will become more common in 2023, owing to the fervent investor interest in generative AI startups since the launch of OpenAI’s ChatGPT last November.

This investor FOMO has resulted in venture capitalists writing large checks to small, often months-old startups aspiring to be the next Google or Apple of AI. Mistral, a French startup, is another example, with Andreessen Horowitz in talks to fund a $400 million round in the six-month-old company, which would value it at up to $2.5 billion, according to Insider last week.

ElevenLabs has been on a roll in 2023, launching a slew of new products, including an enterprise offering and a lower-latency version of its ‘Turbo’ text-to-speech offering.

Similarly, the company has a long-form video content offering called ‘Projects,’ as well as a workflow tool for editing long-form audio content.

It now has over 1 million registered users on its platform since launching its beta at the beginning of 2023.

ElevenLabs cofounder and CTO Mati Staniszewski previously told Insider that the startup sees a lot of potential for its tools to be used by “independent publishers, authors, and newsletter writers who rely on long-form to tell a story.”

ElevenLabs claims to be based in New York, but it is also registered with Companies House in the United Kingdom and has a London address. According to company filings, the startup was founded in January 2022. According to PitchBook, the startup has 27 employees.

According to Insider, the startup’s Series A round was co-led by Andreessen Horowitz, ex-GitHub CEO Nat Friedman, and entrepreneur Daniel Gross, as well as previous investors such as Concept Ventures.

ElevenLabs’ tool has been used by politicians, including New York City Mayor Eric Adams, who used it to robocall residents in languages he doesn’t speak, such as Mandarin, Spanish, and Yiddish – a move that some academics thought was deceptive. Adams’ use of the tool is the most recent example of AI being used by politicians, highlighting the enormous impact the technology could have on the 2024 election.

The White House is concerned about voice cloning. Voice cloning “keeps me up at night,” according to Bruce Reed, President Biden’s AI chief, in an interview with Politico.

“No one will answer the phone if they can’t be sure whether the voice on the other side is real or fake,” he told reporters.

Meta recently published a new policy for dealing with political advertisements generated or manipulated by generative AI. When it comes to digitally created ads, the tech giant will require advertisers to “self-disclose.”