Aleph Alpha, a German generative AI startup, is in talks with investors over a new funding round, Insider has learned.
The startup, based in Heidelberg, Germany, is talking to a number of top-tier VC investors over a round that could be as much as $100 million, four sources familiar with the matter told Insider.
It comes amid a wave of investor hype in the AI market after US startup OpenAI released ChatGPT, based on its GPT-3.5 language model which was trained on Azure, to the public in November.
Industry rivals quickly saw chatbots’ potential to transform online search, with Microsoft releasing its AI-powered Bing and Google internally testing its version, Bard.
Founded in 2019 by CEO Jonas Andrulis, a former machine-learning engineer at Apple, and Samuel Weinbach, Aleph Alpha researches and develops AI systems with a focus on enterprise customers.
Talks over its raise are thought to be at an early stage with term sheets set to be submitted soon.
The company’s new deal has not yet been priced, sources said, but one Berlin-based VC investor told Insider that, amid the hype around the market, the deal could price Aleph Alpha in the $500 million to $1 billion range.
Terms are not final and the deal is subject to change, the sources said.
Aleph Alpha declined to comment.
Aleph has raised raised $33 million from investors to date, per Crunchbase, far behind OpenAI, which has brought in over $11 billion, including $1 billion from Microsoft.
Aleph Alpha has a chatbot called Lumi which is built on top of its language-learning model Luminous.
The company’s models are trained on 300 billion parameters, compared with OpenAI’s 175 billion.
While Aleph Alpha lacks backing from household-name US tech companies, it’s sought to define itself as centered on Europe, saying it aims build a model which will “push European values.”
The company’s clients include the German government, the City of Heidelberg, several German universities and “a large bank,” per Sifted.
Its existing backers include DACH funds Earlybird VC, Lakestar and UVC Partners, alongside LEA Partners, 468 Capital and Cavalry Ventures.
One Berlin-based VC investor told Insider that the company would look to internationalize its cap table with this new funding round.
German AI startups have been booming in recent years with Aleph Alpha’s round coming on the back of a major raise by Google Translate rival, DeepL.
