HeyGen, a startup that uses AI to generate avatars and synthetic videos, is raising $60 million at a pre-investment valuation of $440 million according to a report by The Information. This valuation marks a significant milestone for the three-year-old company, representing a sixfold increase from just four months ago.
The new funding round (which has not yet closed) is being led by longtime Benchmark general partner Peter Fenton and Victor Lazarte, the firm's newest general partner. HeyGen CEO Joshua Xu, a former software engineer at Snap, co-founded the company in late 2020 with Wayne Liang, who briefly worked as a product designer at TikTok-parent ByteDance.
Alongside the news of this substantial funding round, HeyGen has unveiled HeyGen 5.0, its next-generation video platform. The updated AI Studio promises a more user-friendly experience, enabling seamless video creation with greater flexibility and control over audio, elements, and animations. HeyGen 5.0 also introduces personalized videos, allowing users to create and send tailored content to their audience at scale, whether for lead generation, employee onboarding, or student engagement.
HeyGen's rapid growth is evident in its financial performance. The startup is generating more than $20 million in annualized revenue, a significant increase from $3 million in July and $1 million a year ago, according to the source. This impressive trajectory sets HeyGen apart in the competitive landscape of generative AI startups, many of which have struggled to monetize despite substantial capital investments.
However, HeyGen's ties to China have drawn scrutiny from U.S. officials concerned about Chinese investment in American technology. The startup, originally named Surreal, was founded in China during the pandemic but has since relocated its headquarters to Los Angeles. Its early funding came from Chinese investors such as HongShan (formerly Sequoia Capital China) and ZhenFund. A recent report by the House of Representatives' Select Committee on the Chinese Communist Party raised concerns about the potential influence of a Chinese entity over a U.S.-based company developing technology with significant national security implications.
To address these concerns, HeyGen has implemented measures to distance itself from its Chinese investors. The company's customer terms and conditions prohibit the use of its technology for political campaigning or lobbying purposes. Additionally, in November when HeyGen raised funds in a round led by Conviction, a representative of HongShan relinquished the Chinese firm's seat on HeyGen's board of directors.
Chris McKay
As HeyGen continues to grow and innovate, it faces competition from other business-focused AI video startups such as Synthesia and Argil.ai.