Everyone has a story inside them, as someone famous once said. Call a startup Inkitt believes it can use AI to turn the strongest of these into blockbusters and create a new ‘Disney’ for the 21st century around that content. Now, it has raised $37 million to help that ambition.
The startup’s eponymous app lets people self-publish stories and then, using artificial intelligence and data science, selects what it thinks are the most compelling of them to tweak and then distribute and sell on a second application, Galatea.
Its business has already attracted 33 million users and dozens of bestsellers, the company said. The new funding it’s raising, a Series C, will be used to expand the kind of content it produces: artificial intelligence to write stories based on your original ideas and to produce versions of its fiction personalized for specific readers. a transition to games and audiobooks. and more video content adapted from fiction published on its platform — video that is produced with humans today but, eventually, will also be created using artificial intelligence.
The long-term vision, says CEO and founder Ali Albazaz, is to expand its content library and build a media empire around it. Less peer competitor Wattpad and more “the Disney of the 21st century,” as he calls it.
The $37 million round, a Series C, was led by Vinod Khosla of Khosla Ventures. Past backers NEA and Kleiner Perkins also participated, along with other undisclosed investors.
The investment brings Inkitt’s total raised to date to $117 million (other rounds included a $3.9 million seed, a $16 million Series A and a $59 million Series B). At least one publisher has already approached its acquisition, and at a time when there are precious few examples of consumer-focused startups raising funding, we understand investors are already reaching out for another round if Inkitt chooses to raise it. This current Series C values Inkitt at around $400 million post-money.
Inkit’s ambitions are, in some ways, a notable zag for the publishing industry.
With the rise of cell phones and apps built to take up minutes (or sometimes much more) of consumers’ free time, reading has declined over the past two decades. In 2022, the most recent year tracked by the Bureau of Labor Statistics, the average American adult read only about 15 minutes a day, compared to more than 20 minutes several years ago. The average number of books read (and completed) is also down to about 5.
Inkitt bets against this trend, ironically, by leaning into it. It believes it can capture more significant amounts of reading time and engagement from its users by focusing on more innovative ways of delivering books, creating chapters that are shorter and easier to read on mobile devices, and incorporating a range of effects (e.g. sounds) into the entire text to make the reading experience more dynamic.
And also by making the books more suited to the tastes of the readers. He runs A/B tests around every aspect of the project, from titles and story arcs, to opening lines and cliffhangers. This gives Inkitt a wealth of data not only on specific books, but also on the performance of fiction in general and what performs best — he learns that in turn applies more directly to subsequent books that are published.
All of this seems to be paying off. Some services that flourished during the height of the Covid-19 pandemic – “instant” deliveries, online shopping, virtual events and streaming of everything – have deflated, or at least returned to more subdued growth patterns, in recent years. Not the same for Inkitt, Galatea and the startup’s newest addition, Galatea TV, which have all seen increased engagement time.
“People have so much going on now,” Albazaz said of the years since the pandemic. “They’re looking for an escape, and we think that’s why we’ve thrived.”
He said Inkitt, overall, ranks as the world’s 11th best-selling publisher, ahead of household names such as Penguin Random House, claiming its algorithms give it a “20 times” higher success rate than traditional publishers for publishing a best selling book. .
Revenue has doubled in the last year (although it doesn’t disclose an actual number). And while newer projects like Galatea TV are more of an offshoot of the reading business, they’re paying big in their own right. TV series based on the book Galatia Beautiful mistake alone has generated $500,000 in revenue, he said. The company, he added, is “almost profitable.”
Founded in Berlin and now based in San Francisco, Inkitt focuses on fiction — but it wouldn’t be entirely accurate to say it’s aimed at literary fiction. Indeed, after a famous author who dabbled on the platform several years ago walked away in horror and disgust after Inkitt suggested a series of edits for an upcoming novel, Albazaz said Inkitt prefers to avoid the headaches of working with big names. names and big egos to focus on the long tail of undiscovered talent.
It will be interesting to see how amenable this long tail is to bend to the will of the algorithm. Albazaz said AI-generated stories based on compelling treatments created by talented people are very much part of what she hopes to do more of in the future, along with personalizing stories using AI algorithms.
Personalization is still very much a work in progress, he added, with Inkitt experimenting with varying degrees of changes it could apply to an original project or even hand the controls over to the readers themselves.
To see this vision through, the company experimented with a number of LLMs, including APIs from OpenAI, Anthropic and Mistral AI (its current favorite startup for smaller passages, Albazaz said) for narrative construction, creating its own adaptations around them. he said.
Each book is also automatically published in 10 languages: DeepL is the main AI used for this purpose. She uses the ElevenLabs text-to-speech generator for her audiobooks and currently Leonardo for cover art (a recent change from Midjourney, she said). The main idea seems to be to stick with a mix to triangulate for best effect.
“These LLMs write very poor to average content,” he said. “The thing is, LLMs alone are not capable of creating best-selling content. That’s where we come in with the data we’ve gathered over the last two years.”
Interestingly, there’s also an IP reason behind this: Inkitt doesn’t want to rely on any single LLM for a full novel because, even though the platforms insist they have no intention of using proprietary data to train their models, Inkitt he’d rather not take a chance, he said. (To this end, he also sometimes asks for very deliberately flat prompts, to avoid teaching LLMs too much for Inkitt’s best work.)
Even as it navigates these difficult waters to keep from drowning, the startup has certainly found opportunities to float. Her focus and interest in building an AI content empire helped the startup secure its lead investor. Vinod Khosla at end of last year wrote about how he believed the future of entertainment would be hyper-personalized, making Inkitt’s mission (and success so far) a perfect fit.
Vinod himself declined to be interviewed for this story, but provided a statement: “With the advent of AI, entertainment could be abundant and personalized,” he said. “Inkitt does just that with stories, creating content that is hyper-personalized and meaningful to each individual.”
