Deepgram raises $130M at $1.3B valuation and buys a YC AI startup

The use of voice AI in sales, marketing, customer support, and consumer applications has increased dramatically in recent years. As a result, model providers have seen an increase in sales along with investor interest. Based on this demand, Deepgram today said it has raised $130 million in a Series C round led by AVP at a valuation of $1.3 billion.

During the round, existing investors such as Alkeon, In-Q-Tel, Madrona, Tiger, Wing and Y Combinator also put in more money. Additionally, new investors such as Alumni Ventures, Columbia University, Princeville Capital, Twilio and SAP joined the round. The company has raised more than $215 million in funding to date.

The startup’s raise continues the trend of significant funding rounds in voice AI last year, including Seasame’s $250 million Series B, ElevenLab’s $180 million Series C and Gradium’s $70 million seed round.

Elizabeth de Saint-Aignan, a partner at AVP, told TechCrunch that when the fund talked to companies about how they were using AI, voices emerged regularly and it started looking into companies working in this area.

“In 2024, when we talked to companies about how they were thinking about using AI within their business, we started hearing that they were using voice AI in processes like contact centers and sales development. As we talked to them more, we realized that a lot of voice AI technology was powered by Deepgram, and that’s what led us to them [Deepgram]”, said Saint-Aignan.

She noted that voice AI could help make customers’ interactions with businesses more enjoyable while lowering costs for businesses, and Deepgram could play a central role in that.

Deepgram has a number of models related to text-to-speech and speech-to-text, along with platforms and APIs for conversational speech recognition and low-latency interruption handling. It noted that more than 1,300 organizations use its voice AI products and models, including note taker Granola, voice agent startup Vapi and Twilio.

The company’s CEO, Scott Stephenson, said the company did not need the fundraising and that its cash flow was positive last year.

“Over the past year, voice AI has become mainstream and has more potential traction. We see that we can make larger investments sooner to accelerate growth. And that’s why we felt this could be a good time to raise money,” he said.

“We weren’t looking for a raise, though. We had several people come to us. We wanted strategic investors who understand voice AI and its technical complexities and have relationships with companies using the technology.”

The company plans to use the new fundraising to expand its global presence and better support multiple languages. It also focuses on catering for restaurants via voice AI. To that end, it acquired Y-Combinator-backed Ofone, which built a voice AI-powered solution for quick service restaurants. The startup claims it has over 93% accuracy in receiving orders. Voice AI has had its challenges in the restaurant space. Last year Taco Bell has withdrawn its voice AI experiment after someone ordered 18,000 water cups.

“I’m excited about this [voice AI-driven food ordering] because ordering food may be the first positive interaction more than 300 million Americans have with voice AI. There have been a lot of sour interactions with voice AI over the past two decades, with many assistants emerging, and people finding that they didn’t deliver a magical experience. But if you can order your food through natural conversation, people would think the technology is ready for it,” Stephenson said.

There appears to be investor interest in the sector as OfOne’s acquisition news comes after Presto, which owns brands such as Carl’s Jr. served, attracted attention $10 million in new financing.

Analysts reports ensuring that the voice market will grow by more than 30% annually and become a $14 to $20 billion market by 2030. With this growth rate, model and API providers will look like billion-dollar companies by becoming a core component for enterprises and startups developing voice solutions.