AI21 Labs closes $155 million Series C

Background

AI21 Labs develops language models — the systems that generate and process text. The company releases them under its own model line: in March 2023 it launched Jurassic-2 ^[1]. Work of this kind is capital-intensive, because training and serving large models requires computing hardware, data and specialised staff, and the costs are paid long before any product earns money. That is why model developers raise outside capital in stages, from seed and Series A through later rounds, with each round usually larger than the last. AI21 Labs' preceding round had been a $64 million Series B led by Ahren in July 2022 ^[1].

What happened

On Thursday, 31 August 2023, AI21 Labs announced that it had raised $155 million in a Series C round ^[2]. The company said existing investors took part, and that the new investors included Google and Nvidia ^[1]. AI21 Labs' own announcement also named Google and NVIDIA among the participants in the round ^[2].

A Series C round is normally a later-stage financing: the company already has a product and outside backers, and the new money is meant to carry it further — into more compute, more hiring, or more customers — rather than to get it started.

Key details

The investors AI21 Labs listed for the round were Walden Catalyst, Pitango, SCB10X, b2venture, Samsung Next and Prof. Amnon Shashua ^[2]. Coverage of the round reported a valuation of $1.4 billion ^[1]. AI21 Labs itself stated that, after the round, it had raised $283 million in total capital at a valuation of $1.4 billion ^[2].

These numbers measure different things. A valuation is the price investors agree to place on the whole company in a given transaction; it is not revenue, and it is not profit. The $283 million figure is cumulative outside capital — everything the company had raised across its rounds — and not the amount that came in with this one. The distance between the two numbers, $155 million in a single round against $283 million raised in total, shows how much of the company's funding arrived at this late stage.

Why it matters

Two of the new participants are a company that runs large-scale computing infrastructure and a designer of the chips on which AI computation runs. Their participation links the round to the two resources that language model work consumes most heavily: processing hardware and the data centres it sits in. For a company whose product is a model, backing of that kind is not just money; it is a relationship with the supply side of the business.

The timing is also telling. Jurassic-2 had launched in March 2023, roughly five months before the round was announced ^[1], so the financing followed a public product release rather than preceding one.

Finally, the round gives a documented marker of scale. The $1.4 billion valuation and the $283 million total raised are the figures against which AI21 Labs' earlier and later financing can be compared, and they place the company among the privately held developers of general-purpose language models that investors were funding heavily in this period.

AI21 Labs did not, in announcing the round, say what the money would be spent on beyond the general purposes implied by its business; the announcement reported the amount, the investors and the valuation ^[2].