AI start-up HeyGen raises US$60 million after pivoting away from mainland China investors

Generative artificial intelligence (AI) start-up HeyGen has raised US$60 million in its series A funding round, months after dissolving its mainland Chinese operation amid heightened tensions between Washington and Beijing.

Founded in Shenzhen in 2020 and previously known as Surreal, HeyGen's latest funding exercise valued the company at US$500 million, according to a Bloomberg report. The firm - renamed Movio after relocating to Los Angeles, California, in 2022 - rebranded itself as HeyGen in April last year.

HeyGen's latest funding round was completed on June 20 and led by San Francisco-based venture capital firm Benchmark. New and returning investors included Thrive Capital, BOND, Conviction, Dylan Field, Elad Gil, Aviv Nevo, Neil Mehta and SV Angel, according to a statement from HeyGen.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

Following the company's relocation to Los Angeles, HeyGen had asked its Chinese investors - including IDG Capital, Baidu Ventures, HongShan and ZhenFund - to sell shares to their US counterparts to cut its links to the mainland, following scrutiny by American lawmakers for its early connection to China.

Avatars created on HeyGen's platform can provide natural back-and-forth conversations for enterprises to engage customers, provide interactive education or facilitate market research. Photo: SCMP alt=Avatars created on HeyGen's platform can provide natural back-and-forth conversations for enterprises to engage customers, provide interactive education or facilitate market research. Photo: SCMP>

The company did not immediately reply to a request for comment on Monday.

HeyGen co-founder and chief executive Joshua Xu last Thursday said China-based investors have very little stake in the company today, according to the Bloomberg report. The company's Shenzhen entity was dissolved at the end of 2023, according to Chinese corporate registry information.

Xu also said HongShan gave up a board seat in November when HeyGen received funding led by London-based venture capital firm Conviction. He pointed out that HeyGen's data is hosted in Ohio in the US Midwest and that the firm's software is not available in China, the Bloomberg report said.

By cutting its China ties after moving its headquarters to the US, HeyGen will not be restricted by the US government from obtaining advanced semiconductors used for training AI systems. The company is also primarily targeting US enterprise clients including Salesforce, Nvidia and Amazon.com, according to the company's website.

HeyGen's Streaming Avatar application programming interface enables organisations to create interactive, virtual AI sales-development representatives with humanlike presence. Photo: SCMP alt=HeyGen's Streaming Avatar application programming interface enables organisations to create interactive, virtual AI sales-development representatives with humanlike presence. Photo: SCMP>

Heygen, which provides both free services and paid subscriptions from US$24 per month, has about 40,000 paying customers. The platform can create, localise and personalise studio-quality videos without a camera, cast or crew. Users can simply type a script and generate videos for marketing, communications, sales, and learning and development in minutes.

"What's so interesting about our customers is that they are not typical AI early adopters - these are main-street companies ranging from European manufacturers to small businesses and global non-profits to Fortune 500 companies - which speaks to the problem we're solving," HeyGen said in a statement.

The initial iteration of HeyGen gained quick popularity on the Chinese mainland by helping local comedians speak fluent English through their avatars. Its generative AI service, however, faced potential hurdles because the government requires such services to be screened by regulator the Cyberspace Administration of China.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.