Deepgram raised $130 million at a $1.3 billion valuation and bought startup YC AI

The use of voice AI in sales, marketing, customer support, and consumer applications has soared in the past few years. As a result, model submitters have seen an increase in business, along with investor interest. On the back of this demand, Deepgram today said it has raised $130 million in a Series C round led by AVP at a valuation of $1.3 billion.

The round also saw existing investors, such as Alkeon, In-Q-Tel, Madrona, Tiger, Wing and Y Combinator, putting in more money. Additionally, new investors such as Alumni Ventures, Columbia University, Princeville Capital, Twilio, and SAP joined the round. The company has raised more than $215 million in funding to date.

The startup’s raise continues a trend of large funding rounds in voice AI last year, including Seasame series is worth $250 million, ElevenLab Series C valued at $180 millionand Gradium’s $70 million seed round.

Elizabeth de Saint-Aignan, a partner at AVP, told TechCrunch that when the fund was talking to companies about how to use AI, the voices came back repeatedly, and the fund began looking for companies working in this area.

“In 2024, as we were talking to companies about how they were thinking about using AI within their business, we started hearing about them using voice AI in processes like contact centers and sales development. As we talked to them more, we realized that a lot of voice AI technology was powered by Deepgram, and that’s what led us to them (Deepgram).”

She noted that voice AI can help make customer interactions with businesses more enjoyable while reducing costs for businesses, and Deepgram can play a key role in this.

Deepgram has a set of models related to Convert text to speech and speech-to-text, along with platforms and APIs for conversational speech recognition and low-latency interruption processing. It noted that more than 1,300 organizations are using its voice AI products and models, including meeting note taker Granola, voice agent startup Vapi, and Twilio.

The company did not need to fundraise and was cash flow positive last year, said CEO Scott Stephenson.

“In the last year, voice AI has become mainstream, and there is more potential traction. We see that we can make bigger investments sooner in order to accelerate growth. That’s why we felt this might be the right time to raise money,” he said.

“We weren’t looking for a raise, though. We had a lot of people coming to us. We wanted strategic investors who understood voice AI and its technical complexities and had relationships with companies building this technology.”

The company wants to use the new fundraising to expand its global footprint and better support multiple languages. It is also focusing on catering to restaurants through voice AI. To that end, it has acquired Y-Combinator-backed Ofone, which has built an AI-powered voice solution for quick-service restaurants. The startup claims to have over 93% accuracy in receiving orders. Voice AI has had its challenges in the restaurant industry. Last year, Taco Bell She pulled out her AI voice experience After one person asked for 18,000 cups of water.

“I’m excited about this[voice AI food ordering]because ordering food could be the first positive interaction for more than 300 million Americans with voice AI,” Stevenson said. “There have been a lot of bad interactions with voice AI over the last 20 years, with a lot of assistants coming out, and people feeling like those don’t provide a magical experience. But when you can order your food using natural conversation, people will think the technology is ready.”

There appears to be investor interest in the sector, with news of the OfOne acquisition coming after the acquisition of Presto, which serves brands such as Carl’s Jr. $10 million in new financing.

Analysts Reports The voice market is pegged to grow over 30% year over year and become a $14-$20 billion market by 2030. With this growth rate, model and API providers will look to become multi-billion dollar companies by becoming an essential component of enterprises and startups developing voice solutions.