Investors recently told Insider that they were big fans of buzzy photo and video generative AI startup Runway. Now, it looks like they're ready to put their money where their mouth is.
Runway has raised a Series D funding round of at least $100 million at a $1.5 billion valuation from a cloud service provider, according to multiple people familiar with the deal. This deal will triple the startup's valuation from its Series C round from just five months ago, which valued the company at $500 million, according to Forbes.
Runway did not respond to a request for comment.
Runway was founded in 2018 by Cristóbal Valenzuela, Anastasis Germanidis, and Alejandro Matamala-Ortiz, who met at NYU's Interactive Telecommunications Program, a grad program at the intersection of technology and the arts. There, the three had become interested in how to leverage neural networks outside of their normal applications, like self-driving cars, specifically in tools for artists and filmmakers.
The startup has previously raised $100 million in funding from VCs like Amplify Partners, Lux Capital, Madrona, Coatue, and Felicis Ventures.
Their idea, called "crazy" by many, was to build AI models that could power image and video editing and generation tools that would allow creators to generate full videos from mere text prompts.
The moonshot vision eventually became a reality and garnered the attention of investors, who were attracted to the startup for its full-stack strategy of building everything from the underlying models to the infrastructure layer to the end application, they told Insider. Runway's tools were also utilized in award-winning blockbusters, like Everything, Everywhere, All at Once.
The startup's latest round, however, diverges from conventional tech fundraising efforts by raising capital from a cloud service provider rather than a traditional venture capital firm.
This unconventional approach has become more popular for AI startups, who can leverage these relationships to gain access to cloud computing resources, which have become increasingly rare in the AI boom. For instance, in 2019, Microsoft's $1 billion investment in OpenAI was split between cash and credits for Azure, Microsoft's cloud business, the MIT Tech Review reported in 2020.
And for end-to-end AI startups like Runway, capital needs for talent and compute can be even more pressing due to the high levels of technical expertise and computing required to build the entire technology stack, VCs told Insider.
Have a tip on a startup funding round? Contact reporter Stephanie Palazzolo (spalazzolo@insider.com and encrypted messaging at 979-599-8091).
