Venice AI becomes a unicorn with $65M Series A as its privacy-first AI platform takes off

Concerns about the impact of AI chatbots on mental health, personal safety, harassment and disinformation have forced AI developers to implement safeguards to better control how and what their AI models are allowed to respond or do.

But worries and concerns cannot erode demand. AI offers a lot of promise, and people don’t want a faceless tech company limiting their access to that potential. And if they can maintain their privacy while using AI models as they please, why not?

Venice AIwhich offers access to more than 200 AI models while allowing users to maintain their privacy, is raking in thanks to that demand. Just two years later, the company already has more than 850,000 unique visitors to its website and serves more than 3 million active users and an average of 1.7 million API calls per day.

The startup hosts ‘uncensored’ open source models in its own data centers and forwards queries to closed-source models, such as those from OpenAI or Anthropic. All user input is encrypted and unencrypted on the client side and routed through a remote proxy before being processed and returned, without storing any data on Venice’s own systems. It also offers end-to-end encryption on some models, although you’ll have to pay a subscription for this feature.

The company is already profitable, with annual revenue of more than $70 million, CEO Erik Voorhees (pictured above, center) told TechCrunch during an exclusive interview.

Understandably, investors have flocked to grab some of that traction. Venice AI said Wednesday it had raised a $65 million Series A at a $1 billion valuation, its first external fundraising. The round was led by crypto-focused venture capital firm Dragonfly, with participation from Coinbase Ventures, North Island Ventures and others.

The overlap between Voorhees, Venice’s privacy focus, and its new crypto investors is hard to miss, especially given the CEO’s background and his previous work. Voorhees, an early bitcoin advocate, founded a number of crypto companies, including a bitcoin gambling site Satoshi dice and cryptocurrency exchange Shape shiftand has long advocated for the preservation of user privacy.

In reality, when a Wall Street Journal investigation accused ShapeShiftwhere users initially didn’t have to identify themselves, from handling millions of suspicious funds, Voorhees reportedly said, “I don’t think people should have their identities captured just to catch the occasional criminal.”

He made a similar comment when asked how Venice AI feels about providing access to AI models in light of recent cases of AI psychosis and the resulting harm. He said his team views their service as a “neutral tool or platform.”

“This is the same principle you have with Bitcoin, where Bitcoin, as a neutral protocol, works the same way for all people,” he said. “I think it’s actually quite dangerous from a security perspective as the world enters this next phase and everyone is under constant surveillance. To me, that’s actually much more dangerous than one particular person asking a controversial question or something that could be considered bad.”

A lot of attention is also paid to giving users freedom of choice. Users can freely choose from AI models that can generate text, images, audio and video, all of which vary in performance, quality and the amount of censorship applied. The website prominently features several AI “characters” that you can customize and chat with, and the company proudly claims that it offers an “uncensored” experience.

“We optimize for freedom and actually respect users as adults, which I think is rare these days,” Voorhees said.

The founder said Venice is also working on the system prompts of some open models to instruct them to respond more openly, although it is not adding any restrictions to the models.

Unsurprisingly, two crypto tokens are associated with the effort. Venice launched a token called “VVV” in early January in an effort to attract users, Voorhees said, and added another token called “DIEM” in August last year. Users can purchase VVV and then stake it to mint DIEM, which generates $1 in AI credits per day that you can spend on Venice. However, Voorhees said that only about 8% of the company’s users pay with crypto.

The founder attributed the company’s growth to the good performance of the crypto tokens, although he said the strongest driver came close to feature parity with ChatGPT. “When we launched, we were very far away from what ChatGPT could do, but people would use us because it was private. And today we are very close to what ChatGPT can do […] So now that we have closed that gap, it has become an increasingly attractive alternative,” he said.

Looking ahead, Venice AI plans to use the new money to start buying GPUs and building its own data centers so it can stop leasing GPUs and increase its gross margins.