Privacy-focused artificial intelligence company Venice.ai Inc. today revealed that it has raised $65 million in new funding that values the startup at $1 billion.

Venice pitches itself as a private and unrestricted alternative to mainstream chatbots such as ChatGPT. It was founded in 2024 by Erik Voorhees, the cryptocurrency entrepreneur behind the ShapeShift exchange, and Jesse Proudman, an entrepreneur who earlier sold cloud company Blue Box Group to IBM Corp.

The service routes queries to more than 200 open-source and proprietary models spanning text, image, video and audio through a single interface and application programming interface. Unlike most providers, Venice says, it does not log prompts, storing conversations on the user’s own device rather than its servers, and it strips out many of the content filters built into competing tools.

The design is deliberate, according to the company. With no central store of prompts and responses, there is nothing to breach, subpoena or sell. “Venice’s mission is to protect [intelligence] from mass surveillance and censorship,” said Chief Executive Voorhees, who argues that the surveillance of users’ thoughts, rather than model capability or job displacement, is becoming the industry’s defining risk.

That pitch appears to be finding an audience. Venice says it has more than 3.5 million registered users, processes 1.3 trillion tokens a month and became profitable in the first quarter, at a time when many AI firms are still losing money.

Co-founder, President and Chief Technology Officer Proudman said Venice wants to sit on users’ phones alongside ChatGPT and Anthropic’s Claude.

Proudman tied the privacy case to how people now use chatbots for medical questions, legal issues, job negotiations and relationship advice. “It only takes one breach, one disgruntled employee who is going through that data, a government subpoena, a change in government policy and then all of that data no longer is private to you,” he said. The company concedes that its lighter guardrails invite misuse questions and says it builds in some safeguards against illegal activity.

Venice plans to spend the funding building its own data center infrastructure, owning the graphics processing units that run its models rather than renting capacity and scaling its consumer app and API worldwide. The company makes money from consumer subscriptions and paid API access, along with a cryptocurrency called VVV that developers can stake to reserve computing capacity rather than pay per use. It now has about 45 employees, up from roughly 15 a year ago, and operates as a remote team.

The funding is the first outside capital Venice has raised since it launched about two years ago. The round was led by crypto-focused investment firm Dragonfly, with participation from North Island Ventures, Coinbase Ventures, F-Prime Capital, Archetype, Morgan Creek, Liquid2 Ventures and Seattle-based Founders’ Co-op.

Image: Venice