If you want to know how worried VCs (and Silicon Valley, in general) are about legal challenges to training AI on copyrighted material, look no further than the AI Music site Suno.
Suno, which lets anyone create AI-generated songs via prompts, was announced on Wednesday that it raised a $250 million Series C round at a $2.45 billion post-money valuation. The round was led by Menlo Ventures with participation from Nvidia’s venture arm NVentures, as well as Hallwood Media, Lightspeed and Matrix.
The company offers monthly subscriptions to consumers (free subscriptions of $8 or $24 per month) and released a version of Suno for commercial creators in September. It has now reached $200 million in annual revenue, Suno said The Wall Street Journal.
He previously raised a $125 million Series B in May 2024led by Lightspeed Venture Partners, Nat Friedman and Daniel Gross, Matrix, and Founder Collective, at an estimated value of $500 million.
But Suno has also been the poster child for AI training lawsuits from human artists. The company is fighting a suit by three major record labels — Sony Music Entertainment, Universal Music Group and Warner Music Group — which alleges that Suno trained on copyrighted material that was removed from the Internet without permission.
These types of suits still reside in a legal gray area in the US, and most are settled, usually with a training data license agreement. (Last month, Universal and Udio settled their disputes in such a way.) Suno has also faced similar legal challenges from Danish music rights organization Koda and Germany’s GEMA. GEMA, incidentally, earlier this month won its lawsuit filed in Germany against OpenAI that also challenged the legality of training on copyrighted material.
But given Suno’s market success, growth and the obvious potential market for AI-generated music, its legal complications are a shrug for investors.
“Type in an idea, click Create, and suddenly, you’re not just imagining music—you’re making it. That shift from listener to creator? That’s what Suno unlocks,” describe the Menlo VCs who backed the startup. their blog post about the investment.
Menlo not only liked the technology, but also that Suno has grown largely by word of mouth — people sharing songs in their group texts, the investors said.
No doubt the AI industry is, and will continue to, ultimately work out the legal ramifications of acting first, asking permission later, on training data. But before that can be settled, the era of AI-generated music has clearly arrived.
