Investor enthusiasm for artificial intelligence is reigniting funding for creator economy startups, reversing a two-year decline. The positive trends seen in Q1 continued into Q2, reflecting growing confidence that startups can effectively leverage generative AI to craft valuable tools for content creators. Investors believe AI will simplify content creation, from videos to music, in the same way that TikTok revolutionized short-form content creation by eliminating the need for advanced editing skills.
“These AI platforms are starting to be built by literally anyone with a phone or a computer, whereas previous creative platforms required a certain level of skill and know-how to create compelling content,” said Michael Mignano, partner at Lightspeed Venture Partners.
The past quarter has seen the emergence of several AI-powered startups that have been big beneficiaries of this new investment interest: Pika Labs raised $80 million, HeyGen raised $60 million, and Higgsfield raised $8 million, all focused on generating videos from text descriptions. Suno, which enables users to create professional-quality songs from simple text prompts, raised a staggering $125 million in Series B funding led by Lightspeed, making it the largest AI creator funding round this quarter.
Other notable AI deals during the quarter included Cartwheel, which raised $5.6 million for its AI-powered 3D animation tool; Exactly.ai, a London-based company that raised $4.3 million to develop AI image models for artists; and Smashing, an AI-driven content recommendation app that raised $3.4 million. Jars AI, which specializes in interactive and personalized shows, raised $3 million.
Over the past 18 months, social media creators have been experimenting with a variety of AI tools, from ChatGPT-generated ideas to AI voice-overs and digital cloning. But most creators report that AI is not yet central to their workflow. Many feel that AI video editing software still leaves something to be desired, and are sticking to traditional editing methods. That said, expectations that AI technology will evolve over the coming year are widely shared, and investors are eager to bet on this change.
DreamFlare AI, an app that helps monetize AI-generated content, raised $1.65 million in pre-seed funding from FoundersX. Ticketmaster partnered with Apple’s Shazam to simplify ticket purchasing for fans who identify songs in the app. YouTube is testing an update to its Erase Song tool to allow it to remove copyrighted music while preserving other audio elements.
NATO invited 16 creators from countries such as the UK, Germany and France to the Washington summit as part of an effort to promote civic engagement among Gen Z. It also invited 10 US influencers invited by the Department of Defense and the Department of State. Popular anonymous messaging app NGL was banned by US federal regulators for users under 18 due to concerns about cyberbullying and harmful messages. Caroline Gleich, a ski mountaineer and influencer running for Republican Senator Mitt Romney’s seat in Utah, called on the Federal Election Commission to adjust rules, saying they disadvantage influencers who earn income from online sponsorships. Additionally, the European Influencer Marketing Alliance, a body of influencer marketing agencies, was formed to promote professional practices amid increased regulatory scrutiny in countries such as Greece and Spain.
In a video, Instagram chief executive Adam Mosseri reiterated that the platform won’t pursue long-form video content because it reduces user interaction and content sharing.
Joe Rogan will star in the live comedy special “Burn the Boats,” which will premiere on Netflix on August 3 as part of Netflix’s expansion of live programming. TikTok creator Loren Gray, who has 53.8 million followers, will appear in the Netflix film “Incoming,” which will be released on August 23. Logan Paul and KSI’s energy drink Prime has signed a sponsorship deal with basketball star Kevin Durant at the Paris Olympics, offering a customized Prime drink for Durant.
