DeepL, AI-Powered Language Translator, Secures Over $100 Million in Funding at Valuation of Over $1 Billion

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DeepL Founder Jaroslaw Kutylowski
©   DeepL Founder Jaroslaw Kutylowski 

One of the most recent AI startups to attract a large amount of funding is DeepL. Similar to Google Translate and Bing, this company offers free translation-as-a-service online. They even offer this service to businesses to compete against Google’s services. DeepL also provides free translation as a service to individual users — competing with other online translation tools like Bing and Google. The company recently announced they raised $1 billion in investment funding. This is equivalent to over $1 billion today at current exchange rates.

DeepL, a company based in Cologne, Germany, doesn’t want to focus on how much money it has raised. As an interview stated, this is because the company believes its funding to be too large for the public eye. Instead, CEO and founder Jaroslaw Kutylowski wants people to focus on the benefits of what his company has created. A venture capitalist that connected with DeepL claimed that $125 million was the target amount for fundraising. A rumor from November stated that $100 million in funding closed a month earlier. It was at the other end of the report from this end.

An anonymous investor revealed to a source that the $1 billion valuation came from a 20x multiplier of DeepL’s current annual run rate of $50 million. Right now, the picture isn’t looking so good for this startup. In the current fundraising climate, the investor thought that a 4x or 5x multiple for DeepL was “pretty bullish.” However, that’s because DeepL was growing at 100% and was close to being profitable.

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Bessemer Venture Partners, Atomico and IVP are the newest investors listed on the list. Another previous backer is Benchmark, and previous backers BTOV and DeepL also participated in the round.

Although DeepL primarily provides its translation services to businesses over individuals, its expertise has focused on smaller organizations and media sources up to now.

DeepL’s translation software powers Mastodon, but the startup is also interested in other projects. One they’re currently working on is a Grammarly-like writing app with a fully functional beta release. They plan to use their funding to expand the scope of their other projects as well as develop new ones.

The company’s research and development process is based on the over one billion queries and translations collected in its database. To double check translations, the company employs a method that searches the web for related text. This is then housed on a supercomputer that both provides translations and continually develops new algorithms.

As Kutylowski mentions, the company’s engineers are currently working 60 to 70% of the time on new tech. This includes both short-term projects aimed at a specific commercial goal and longer-term projects focused on breaking new ground in different areas of science. They appreciate how investors demand high returns and commercial end points from deep learning projects. However, the latter group of projects still receives the most attention from them — even if investors grow impatient with them. This is because DeepL continues to focus on its core translation services as a paid “pro” tier option and a free alternative available in limited formats.

DeepL has been fortunate enough to not experience any difficulty in raising funding rounds. They also claim that the high valuations companies face due to this struggle cause a lot of stress for both investors and businesses. However, Kutylowski pointed out that the growing popularity of language services based on artificial intelligence has helped DeepL out.

Johnny said that he liked the idea of people thinking AI had become commonplace in 2022. This was because AI had become more common in people’s lives instead of a novelty. Johnny explained that this was a good thing for the Lab because it opened up new markets and allowed them to use their tools more often. It feels like we’ve moved past the question “Should I trust artificial intelligence.”

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Although the company always competed with Google and Microsoft in the translation field, smaller competitors often outperformed them. Kutylowski wouldn’t comment on whether any other large tech companies approached them for investments, partnerships or acquisitions. Both Google and Microsoft invested in the companies, but neither investor is an investor — instead, both Google and Microsoft are very big on artificial intelligence and practical uses for its results.

OpenAI is a spin-off organization of the artificial intelligence company Google DeepMind. It has released several high-quality AI-powered tools that have changed public discourse on their use. Some of these tools have caused damage and others have benefited people. It is reportedly seeking outside funding; its $10 billion request reportedly valued Google DeepMind at $29 billion.

Although the future of DeepL remains uncertain, it’s possible that OpenAI could partner up with a third party to create their own translation services. Meanwhile, Kutylowski said that there were “no concrete plans” to create a working relationship between DeepL and OpenAI at the moment. Instead, he noted that both companies were trying to link their language models together by collaborating with customers who use both systems.

DeepL plans to continue improving the services it already offers.

“We don’t rest when it comes to our efforts to translate,” said Jakub Kutylowski. “We push through intense competition by instinct.”

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