Concerns about the impact of AI chatbots on mental health, personal safety, harassment and misinformation have forced AI developers to implement safeguards to better control how and what their AI models are allowed to respond or do.
But worries and concerns cannot erode demand. AI offers a lot of promise, and people don’t want an impersonal tech company to limit their access to that potential. And if they can maintain their privacy while using AI models however they want, why not?
Venice AIwhich offers access to more than 200 AI models while allowing users to maintain their privacy, is cashing in on this demand. Just two years later, the company already has more than 850,000 unique visitors to its website and serves more than 3 million active users and an average of 1.7 million API calls per day.
The startup hosts “censor-free” open-source models in its own data centers and routes queries to closed-source models such as those of OpenAI or Anthropic. All user input is encrypted and unencrypted client-side and routed through an external proxy before being processed and returned, with no data stored on Venice’s systems. It also provides end-to-end encryption on some models, although you have to pay for a subscription to get this feature.
The company is already profitable, with annual revenue at the current rate of more than $70 million, CEO Erik Voorhees (pictured above, center) said during an exclusive interview with TechCrunch.
Understandably, investors have flocked to get a piece of that traction. Venice AI announced Wednesday that it has raised a $65 million Series A at a $1 billion valuation, its first external fundraising. The round was led by crypto-focused venture capital firm Dragonfly, with participation from Coinbase Ventures, North Island Ventures and others.
The overlap between Voorhees, Venice’s focus on privacy, and its new cryptocurrency investors is hard to miss, especially given the CEO’s background and past. An early proponent of bitcoin, Voorhees has founded a few crypto companies, including the bitcoin gaming site Satoshi Dice and cryptocurrency exchange ShapeShiftand has long argued in favor of preserving user privacy.
Indeed, when a Wall Street Journal investigation blamed ShapeShiftwhich initially did not require its users to identify themselves, to process millions of suspicious funds, Voorhees is quoted as saying, “I don’t think people should be recording their identities to arrest a casual criminal.”
He struck a similar note when asked how Venice AI feels about offering access to AI models in light of recent cases of AI psychosis and the resulting harm, saying his team views their service as a “neutral tool or a neutral platform.”
“That’s the same principle you have in Bitcoin, where Bitcoin, as a neutral protocol, works the same way for all people,” he said. “I think it’s really, really dangerous from a security perspective, for the world to go into this next phase and have everybody monitored all the time. To me, that’s really much more dangerous than any particular person asking a controversial question or something that might be considered bad.”
There is also a significant focus on giving users agency. Users are free to choose from AI models that can generate text, images, audio, and video — all of which vary in performance, quality, and the amount of censorship applied. The site prominently features several AI “characters” that you can customize and chat with, and the company proudly states that it offers a “censor-free” experience.
“We optimize for freedom and respect users as adults, which is, I think, rare these days,” Voorhees said.
The founder said Venice is also working on some open model system prompts to instruct them to answer more openly, though it doesn’t add any restrictions to the models.
As expected, there are two crypto tokens associated with the effort. Venice launched a token called “VVV” in early January in an effort to attract users, Voorhees said, and in August of last year added another, called “DIEM.” Users can buy VVV and then stake it to cut DIEM, which generates AI credits worth $1 per day to spend in Venice. However, Voorhees said only about 8% of the company’s users pay with crypto.
The founder attributed the company’s growth to the strong performance of cryptocurrencies, although he said the strongest driver was approaching feature parity with ChatGPT. “When we started, we were very far from what ChatGPT could do, but people would use us because it was private. And today, we are very close to what ChatGPT can do […] So as we’ve closed that gap, it’s become an increasingly compelling alternative,” he said.
Looking ahead, Venice AI wants to use the new cash to start buying GPUs and building its own data centers so it can stop leasing GPUs and increase its gross margins.
When you purchase through links in our articles, we may earn a small commission. This does not affect our editorial independence.
