HeyGen is About to Close $60M on a $500M Post Valuation
HeyGen is About to Close $60M on a $500M Post Valuation
Can it sustain the growth?
The Information reported that HeyGen is poised to close a $60 million funding round led by Benchmark. The deal is expected to value the company at $440 million pre-investment and $500 million post-money. That’s a halifcorn in VC parlance and a big rise from the company’s $9 million seed round in 2022. Momentum at the AI startup is backed by rising revenue, up 20x from last year.
HeyGen is generating more than $20 million in annualized revenue, or last month’s revenue multiplied by 12, up from $3 million in July and $1 million a year ago, the person with direct knowledge of its finances said.
The figures are impressive, but you might note that there was a deceleration in growth between July 2023 and March 2024. Four months to triple from $1-$3 million should allow for two additional triplings at a constant growth rate which would have netted $27 million in revenue. Granted, the information provided is incomplete so there may still be a consistent growth rate and the figures are strongly positive in any event.
AI Presenter Video Generation
Using a term such as AI presenter video generation is descriptive while also being very long. However, this is not text-to-video like Sora or Pika Labs, where a few words can create limitless images across a variety of styles. In this case, the entered text is for information delivery by an AI avatar. This has become a popular category for training internal teams, providing product information, facilitating language learning, and even delivering news.
A key differentiator for HeyGen is that the avatars can often seem more lifelike than its competitors. Lipsynching is a big part of that, along with the photo-realism provided for most avatars. The company also offers to create digital twins of real people with several different versions that vary in cost and fidelity. However, it is not significantly different than its competitors. HeyGen is marginally better in a few areas, such as lipsynching, avatar fidelity, and voice customization. Apparently, that has been enough to drive significant sales growth.
A Crowded Market
HeyGen’s growth is notable in a crowded market segment that features Synthesia, Soul Machines, Hour One, Deepbrain AI, and many others. Synthesia raised $90 million in mid-2023 at a $1 billion valuation and added Accel and NVIDIA to its investor roster. At the time, it claimed over 50,000 customers.
AI presenter video generators are interesting because they have use cases today that business users are willing to pay for and because they integrate so many elements of generative AI and synthetic media technology. The avatars, body movements, lip-synching, synthetic voices, text-to-image generators for scene backgrounds, and even large language models all work in concert to deliver a compelling product.
Synthesia cracked the code in generating growth in corporate training departments, followed by competitors such as Collossyan. HeyGen is clearly popular for this use case, but maybe even more so with product marketing departments. The question now is whether it can keep up the growth or will instead follow many of its predecessors that grabbed attention and customers and then stagnated.
