Yet more major funding is being poured into a startup focused on AI. Today, DeepL – the company that builds automated text translation and writing tools that compete against the likes of Google Translate and Grammarly – announced that it’s raised an additional $300 million. It is now valued at $2 billion, post-money.
This round – led by Index Ventures – underscores the frenetic interest that investors have in AI startups at the moment, and how the startups are capitalizing on that opportunity while they can. DeepL, which is still not profitable, was valued at $1 billion in January 2023, when it raised just over $100 million.
The funding will be used to drive more sales and marketing for the company, as well as further research and development.
On the sales side, the company said that it has more than 100,000 businesses and other organizations using its tools. Given that this is just a tiny percentage of the company’s addressable market, the aim is to try to scale that significantly.
CEO and founder Jarek Kutylowski said in an interview earlier this month that the company has largely grown organically up to now and it was looking to ramp up sales and marketing efforts to complement that, both to add more customers and to expand what it does with those it already has.
That highlights a key issue for AI tech companies targeting the business market: although many executives are pressing their teams to look at AI and come up with strategies for how it can be used in their organizations, to date many projects have failed to progress from the pilot or small deployment phase, and so ramping that up will be of prime importance to AI tech vendors.
“Inbound is great, but also we really want to develop a little bit stronger relationship with our customers,” he said. “We’re working hard on also developing a better outbound function because inbound, honestly, it’s only going to get you so far. At some point in time, you have to start kind of solving the problems together with your customers. The company’s transforming quite a bit into this kind of enterprise direction, which is kind of complicated and interesting for a research based company.” Kutylowski said that currently about 60% of the company’s staff are technologists at the moment. (It will be hiring more non-technical people going forward.)
Indeed, how DeepL continues to balance that with a focus on research will be one of its big challenges.
The startup currently supports some 32 different languages on its platform, and it has been on a steady pace for product expansion with the latest addition to the list being one very much focused on enterprises: DeepL Write Pro is described by the company as “a writing assistant specifically tailored for business.” Customers signing up to its tools include Zendesk, Nikkei, Coursera, and Deutsche Bahn, it said.
“Companies want to have control over how their employees speak, right?” asked Kutylowsi.
However, DeepL faces potentially strong competition from a wide swathe of other companies both specializing in the same area as it is, as well as wider platform companies like Google, Amazon and Microsoft that already have large operations in areas like translation and are looking to enhance them further with AI.
And while some of the newer foundational AI companies like OpenAI or Anthropic have not made special, product-focused headway into precisely the same space as DeepL, there is an obvious opportunity for AI platform players, too. While the focus for some of these companies right now might not be on translation and text-based writing improvements, the bigger picture of how to make AI more seamless and “human” like will continue to be a priority, so DeepL cannot rest on what it claims to be a leading position today.
ICONIQ Growth, Teachers’ Venture Growth, and previous backers IVP, Atomico, and WiL all also participated in the round.
“DeepL’s runaway success is a bit of an ‘open secret’ in the business community,” said Danny Rimer of Index Ventures in a prepared statement. “The company is exceptionally thoughtful about creating cutting-edge AI products that deliver real and immediate value to their customers.”
