AI startup Writer is raising $200M in funding at a $1.9 billion valuation, launches new model to compete with OpenAI

AI startup Writer is reportedly raising up to $200 million at a $1.9 billion valuation, according to a source who spoke with CNBC. This marks a significant jump from its valuation last September when the company raised $100 million at a valuation of over $500 million.

Alongside the funding news, the San Francisco-based Writer has launched a new AI model to compete with enterprise offerings from companies like OpenAI and Anthropic. Unlike many of its competitors, Writer spent considerably less on training its AI, investing about $700,000 on the process, including data and GPUs. This is a fraction of the millions that other startups typically spend.

One of Writer’s key strategies for reducing costs is the use of synthetic data—AI-generated information that simulates real-world data. This approach is gaining traction as a way to protect privacy while maintaining the effectiveness of AI models, CNBC reported.

A recent study by AI researchers suggests that, at the current pace of AI development, publicly available training data could be exhausted by 2026 to 2032, underscoring the growing reliance on synthetic data.

Big players like Amazon, Meta, and OpenAI are already using synthetic data in their models. However, some experts caution that synthetic data must be used carefully, as it can potentially degrade model performance or reinforce biases if not properly handled.

Founded in 2020 by CEO May Habib and CTO Waseem AlShikh, Writer is a generative AI platform designed for enterprises. Its technology helps teams in areas like product development, marketing, operations, and HR boost productivity by generating human-like text and analyzing data. Writer’s clients include major companies such as Accenture, Uber, Salesforce, L’Oréal, and Vanguard, with more than 250 enterprises using its platform across various sectors.

AlShikh told CNBC that Writer has been refining its synthetic data pipeline for years. He added that the company doesn’t rely on fake or hallucinated data but instead transforms factual information into a cleaner, more structured format for training purposes.

“There’s some confusion in the industry about the definition of ‘synthetic’ data,” Alshikh told CNBC. “To be clear, we don’t train our models on fake or hallucination data, and we don’t use a model to generate random data… We take real, factual data and convert it to synthetic data that is specifically structured in a clearer and cleaner way for model training.”

The generative AI market is projected to surpass $1 trillion in revenue within the next decade. So far in 2024, investors have poured $26.8 billion into 498 generative AI deals, according to PitchBook, while companies in the sector raised $25.9 billion in 2023—an increase of over 200% from the previous year.

Recognized as one of Forbes’ top 50 AI companies, Writer counts Fortune 500 clients like Accenture, Intuit, L’Oréal, and Vanguard. The company operates out of San Francisco, New York, and London and is backed by investors including ICONIQ Growth, Insight Partners, WndrCo, Balderton Capital, and Aspect Ventures.

Writer Founders, May Habib (CEO) and Waseem AlShikh (CTO)