Copy.ai, a startup developing AI-powered copywriting tools for business customers, announced a round of $ 2.9 million this morning. The investment was led by Craft Ventures. Other investors participated in the deal, including minor checks from Li Jin’s newly established Atelier Ventures and Sequoia.
The launch is remarkable for a number of reasons. First of all for his model of public building. I initially heard about the company through its monthly updates it posts on Twitter. Thanks to that, I can tell you that Copy.ai had a monthly recurring revenue (MRR) of $ 53,600. That number, up 46% from January, translates into annual recurring revenue (ARR) of $ 643,200.
Copy.ai also shares the usage numbers and humorously the number of Twitter followers recorded by its founder Paul Yacoubian in the last month.
The startup is also worth seeing because it is part of a growing cohort of companies that are building on GPT-3, which its predecessor, the OpenAI project, describes as an “autoregressive language model with 175 billion parameters”. In general, it’s a piece of AI that can generate words.
Some investors are more optimistic about startups using this technology. Madrona’s Matt McIlwain recently wrote on TechCrunch that “the introduction of GPT-3 in 2020 was a turning point for artificial intelligence,” which will lead to the “launch of a thousand new startups and applications.”
That goes as far as that. Not only did Copy.ai break into the market early, but TechCrunch has covered a number of other startups using GPT-3, including OthersideAi, which sold $ 2.6 million in November 2020 and an “AI dungeon maker” called Latitude, which also uses GPT-3 and raised $ 3.3 million in February.
But enough about his cohort. We come to the structure of Copy.ai.
Before founding Copy.ai, Yacoubian was an investor and apparently a hobbyist. He was playing with GPT-3’s predecessor, GPT-2, when it came out, and told TechCrunch in an interview that he discovered the tool created a lot of “nonsense”, with the occasional “flash of brilliance.” GPT-3 turned out to be even better in his opinion, offering a 50-fold improvement over the previous generation.
Use Twitter as a sales method – Copy.ai uses Twitter as a sales channel and therefore reports on social media metrics. Yacoubian and co-founder Chris Lu have started several different design projects with GPT-3. Simplify.so compressed text, a Slackbot was created but never got outside, and taglines.ai was put together to help companies develop slogans.
The latter caught on early and generated around 700 registrations in two days. That was enough of a user base, the co-founders decided to start monetizing their tool. Then they decided to expand the initial to other writing use cases to help people with myriad different writing projects. Copy.ai was created out of this concept.
The product can now generate text for blogs and products, as well as headings and the like, based on user-supplied word input.
What is strange and almost contrary to your humble servant as a writer is that Copy.ai does not want to spare you the number of words per se. Instead, a number of possible text results are generated from which the customer can then choose. Do you remember the brilliant flashes that Yacoubian could generate, according to GPT-2? GPT-3 is even better and offers Copy.ai users even better text formulations for their needs. And then the person in the loop plays the editor role, selects which one he wants the most and, I suspect, optimizes from there.
When Copy.ai was released in October 2020, it received 2,000 registrations in the first two days. Then investors began to reach out.
Copy.ai quit their day jobs and became a full time affair. The unorthodox startup also put together an unorthodox round that arose from what Yacoubian referred to as “as many people as possible” [they] could. “That was 80 people, give or take.
The round started as Capped SAFE, Y Combinator’s preferred investment vehicle, which allows startups to raise capital from outside sources without formal pricing. Instead, SAFEs are often “limited” to a maximum rating. Copy.ai increased its cap as the fundraising process progressed.
David Sacks, founder of Craft Ventures, told TechCrunch that he believes that “AI’s generation of natural language will change the way marketing teams make copies,” and that startups “are rarely this powerful Bottom-up acceptance comes “in such a short amount of time. “
I’m honestly a little excited to see what Copy.ai can do, not because I’ll be using its product – it’s not exactly in my wheelhouse – but because I’m pretty excited about GPT-3 as a technology. And the startup is an in-market experiment on AI and writing. Two things that are very close to my heart.