Image Credit: Photo room Under license.
Apps that allow users to capture, manipulate and share images have been hugely successful in the mobile world over the years. Now, the advent of AI has opened up the market to a new wave of startups.
Photo room — a startup from Paris, France — has developed a popular AI-based image editing application and API aimed at e-commerce sellers, media professionals and others. (It was also used for power a Barbie Personalized Poster Site.) TechCrunch understands that the startup is now in the process of closing a round of funding.
Multiple sources say the startup is raising $50 million to $60 million at a pre-money valuation of $500 million to $600 million. In a market where AI is hot, but overall funding is very restrictive, PhotoRoom is turning heads — and getting people to open their checkbooks.
It is not clear who the full investor list is. Balderton, who led the startup's previous round, is leading this round as well, a source said. Others said other previous backers are participating along with new investors. “They are choosing between different term papers,” said a source.
Besides Balderton, existing backers include Adjacent, Kima Ventures, FJ Labs, Meta, Y Combinator (which was a member of the Summer 2020 cohort, its first remote patch in the wake of Covid-19) and several other angels. Yann LeCun, Zehan Wang (formerly of Magic Pony and Twitter), Hugging Face and executives from Disney+ and more. If the round closes at this figure, Photoroom will have raised $70-80 million.
Photoroom and CEO Matthieu Rouif, who co-founded Photoroom with CTO Eliot Andres, declined to comment on financial questions. Balderton did not respond to requests for comment for this story. Others asked not to be named.
Paris, where Photoroom is located, has emerged as a key city for AI development.
In addition to a wave of other smaller startups, Meta has a large AI lab led by Yann LeCun; Hugging Face, now in NYC, launched from Paris; And Mistral AI, which ambitiously builds the underlying large language models it wants to keep open source, is now valued at $2 billion.
Photoroom's rise follows other currents currently sweeping the tech world that defy the current norm around AI.
Over the years, the camera has become the most important feature in smartphones, more important than the basic phone features. However, most of the wealth of that trend has gone to consumer apps and their ecosystems. Photoroom stands out in part for its primary positioning, at least for now, as a B2B tool.
Initially, Photoroom found traction with a long tail of small businesses, e-commerce sellers and resellers looking for photo editing software that was fast, easy to use and cost-effective. : Users can clip images from the background and apply other effects, some of which can be invoked and created with word commands. Customers use those images in online sales listings on sites like Depop, eBay and Boschmark.
But with its API, PhotoRoom has found an audience among a larger pool of customers. Warner Bros. created a social marketing campaign using the API Barbie Movie this summer: Fans were able to carve out their own images and insert them into their own personalized Barbie posters. The tool and the resulting posters have been shared 1 million times, Photoroom said.
In addition to Warner Bros., Netflix and online food delivery startup Volt, among others, use its tools for a wide range of use cases.
It has built credibility among its peers in the tech community.
Until now, PhotoRoom has been building its platform based on its own vision models, trained on its own data — a way to ensure it has better control over those images and avoid copyright issues. It uses tools like Dust to combine these with third-party LLMs to create new functionality. Last year, for example, the The company used GPT-4 Enhance its “Instant Backgrounds” feature with suggested scenes that can be created with word prompts. The company is constantly developing, adding a Improved shadow feature to its API just last week.
Importantly (especially now), in addition to an expanding feature set, Photoroom's B2B focus helped tie its growth into a revenue-generating business model.
The product has a freemium layer, in the form of a limited set of features that can be used on a limited number of images at no charge. But there are different ones Price levels This varies by country (in the UK, the basic Pro tier of mobile costs £3.99/week or £69.99/year). There are also separate rates for web users, Shopify customers, large business users and its API.
Add all this, and since raising $19 million in its last round in 2022, PhotoRoom has been exploding.
In the main market of America, according to Data.ai statistics, its iOS app currently ranks third among all graphics and design apps, and it's been comfortably in the top 10 for the past three months, sometimes at the top. It is currently the number one photo app in the US on Android
Similar web As of December 2023, the number of monthly web visitors is more than 27 million, a figure that has increased by more than 18% in the previous three months; But that's only a small part of its base: nearly 90% of app traffic and usage comes from a mobile app.
The company told TechCrunch in December that in the three years since its launch, it has reached more than 100 million downloads of its apps and is on track for $50 million in ARR.
There is a huge amount of buzz around AI among investors looking for the next big hit.
In September of last year, Andreessen Horowitz consumer partner Olivia Moore published some research after interest in gen AI spiked in the wake of ChatGPT. Running the numbers For popular AI applications.
The report ranked Photoroom as the sixth most popular generative AI product. While ChatGPT was, unsurprisingly, the most popular Gen-AI product, the bottom line was that the space was still young. Most types of applications, he wrote, are still to be captured; Within the popular area of AI image-based tools, apps like PhotoRoom have, in his opinion, found success.
“Products designed for specific use cases or workflows are growing alongside common tools and are showing signs of becoming successful enterprises as well,” Moore wrote.
A spokesperson for PhotoRoom pointed to TC specifically for the A16z research, but declined to say whether A16Z is one of the investors in the company. We've reached out to a16z to hear and will update this story when we learn.
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