Artificial intelligence developer World Labs Inc. is reportedly in talks to raise up to $500 million from investors.

Sources told Bloomberg late Thursday that the startup, which is led by AI pioneer Fei-Fei Li, could receive a valuation of $5 billion in the round. That’s $4 billion more than in 2024. The sources added that the terms of the raise could still change.

The report didn’t name the investors that are expected to participate in the deal, but startup funding rounds almost always include contributions from returning backers. World Labs has so far raised $230 million from Nvidia Corp.’s NVentures, AMD Ventures, Adobe Ventures, Databricks Ventures and other prominent backers. It’s likely that at least a few of those investors will join the new round.

Fei-Fei Li, World Labs’ founding chief executive, is a computer science professor at Stanford University. Often called the “godmother of AI,” she led the development of ImageNet, an early AI training dataset that played an instrumental role in the emergence of modern neural networks. It was used to develop, among others, AlexNet, a groundbreaking AI model that helped spark the current interest in the technology.

World Labs is training world models, neural networks that generate three-dimensional virtual environments. The company launched its first algorithm, Marble, in November. It can generate virtual environments based on user-provided text, images and videos.

One of Marble’s flagship features is a customization tool called Chisel. It enables users to assemble a 3D object from simple geometric structures such as boxes. From there, they can create multiple versions of the object with different design styles.

One of the markets where Chisel has potential applications is the construction sector. An architecture firm could create a virtual replica of a building’s structure and then simulate different interior design options. 

According to World Labs, Marble also lends itself to a range of other use cases. A robotics company could use the model to create simulations in which its machines’ autonomous navigation software can be tested. Video game studios, in turn, can speed up graphic design tasks.

Historically, 3D graphics were mainly rendered using an approach called polygon mesh processing. The technology assembles 3D objects from numerous tiny triangles. Marble supports a newer rendering approach called 3DGS that provides higher visual fidelity. Instead of using triangles, 3DGS assembles 3D objects from millions of semitransparent dots.

Marble can also implement 3D objects in a lower-resolution, hardware-efficient format known as a collider mesh. The format is useful for simulation use cases that don’t need to maximize the visual fidelity of a virtual environment.

World Labs made Marble available through an application programming interface on Wednesday. In its announcement of the launch, the company revealed that several organizations have already adopted the API. That early user base momentum may be one of the reasons investors are expected to give World Labs a $4 billion valuation boost.

Bloomberg’s sources didn’t specify how the company plans to spend the funding. A job posting indicates that it’s developing new world models based on the diffusion design, the go-to architecture for graphics generators. One of World Labs’ priorities is to create distilled, or scale-down, algorithms that require less hardware to run than frontier models.

Image: World Labs