Investors are showing a lot of enthusiasm for AI startups, especially those focused on helping humans communicate with one another. Today, DeepL – an instant translation-as-a-service provider which competes with Google, Bing and other online tools – announced it has raised funds at a €1 billion ($1 billion) valuation.
DeepL, based in Cologne, Germany, has raised an undisclosed amount of funding. CEO and founder Jaroslaw Kutylowski told TechGround that the figure could range from $100-125 million; the investment closed earlier this month.
DeepL, the startup, has raised funds at a $1 billion valuation based on its 20x annual run rate of $50 million as of end-2020. This is an optimistic multiple in today’s market but reflects DeepL’s strong growth (currently 100%) and near profitability.
DeepL’s latest round was led by IVP, with Bessemer Venture Partners, Atomico, WiL and previous investors Benchmark and btov participating.
DeepL specializes in serving smaller and medium businesses with translation services, rather than individuals.
DeepL has the potential to scale significantly, as evidenced by its translation service on Mastodon. The startup plans to use the funding to expand coverage for larger enterprises and build new services, like a Grammarly-style same-language writing improver currently in closed beta and launching soon.
The company has invested heavily in R&D and utilizes a database of over a billion translations and queries, plus web-scraping for double-checking accuracy. This is all powered by an advanced supercomputer that continues to learn and improve its translation capabilities.
Kutylowski reports that 60-70% of DeepL’s staff are engineers, devoted to developing tech for commercial and long-term goals. Despite investor pressure, moonshot endeavors remain a priority due to the success of their translation services (offered on Pro and free tiers).
DeepL lucked out: Many startups have been unable to secure funding, with investors applying pressure on valuations due to the market downturn. Fortunately for DeepL, however, AI-based language services are in high demand and have buoyed them up. Kutylowski commented on this positive trend.
He praised 2022 for the widespread acceptance of AI: “It’s gone from being a novelty to becoming a typical tool. We now have access to more markets and our tools are used much more often. The question is no longer ‘Do I trust AI?'”
The upstart Kutylowski has long compared favorably to tech Goliaths Google and Microsoft on the translation front, though neither are investors. When asked if any other big tech companies such as Amazon (which is heavily invested in AI) had ever approached Kutylowski for investment, partnerships or acquisitions, he declined to comment.
OpenAI is entering the AI market, potentially creating another competitor for DeepL. They are rolling out powerful tools and generating debate on their use – good or bad. It’s reported that Microsoft is leading a $10 billion fundraise at an incredible valuation of $29 billion.
OpenAI’s plans for building translation services or partnering with a third party are unclear. Kutylowski said there are currently “no concrete plans” on how/if DeepL and Open AI could work together, but the language models used by both companies have similarities and they share many customers. He added that “they want to intermingle them together.”
DeepL plans to keep improving its services.
“We’re used to tackling tough competition,” Kutylowski said, “so pushing forward is part of our culture.”