Frontier artificial intelligence research and product startup Lemon Slice launched today and announced that it had raised $10.5 million in funding.

The money will be used to scale up its real-time interactive avatar technology and drive broader commercial adoption of its application programming interface and embedded avatar products.

Founded in 2024 and a graduate of the Y Combinator Winter 2024 batch, Lemon Slice is building foundational technology for interactive video experiences that respond in real time to users rather than passively playing back prerecorded content.

Lemon Slice offers advanced AI video avatar technology that can transform a single still image into a fully interactive, conversational video character. The company’s flagship model, called Lemon Slice-2, allows users to upload a photo, whether a corporate headshot, a cartoon, or even a painting and then immediately engage in a live video call with that character.

What sets Lemon Slice apart from its competitors is that the characters are created in real time, rather than requiring extensive training data or video clips, or imposing restrictive style limitations.

The company’s technology is powered by a large-scale video diffusion transformer that’s engineered to generate every pixel of animation on the fly, including facial expressions, gestures and full-body motion. Lemon Slice claims that the tech allows it to deliver expressive and emotionally engaging avatars that feel more natural and interactive than typical static or limited avatars.

“The primary complaint about AI avatars is that they lack realism and detract value,” explained co-founder and Chief Executive Lina Colucci. “Our avatar models are charismatic and fun to interact with. In the future, all video will be interactive and personalized to whoever is watching. We’re building the technology that makes that possible.”

Lemon Slice’s tech can be accessed and used by developers via an API and website owners can embed interactive avatar widgets with minimal coding effort.

The seed funding came from Matrix Partners LP, Y Combinator Management, Arash Ferdowsi, who’s chief technology officer of Dropbox Inc., Emmett Shear, CEO of Twitch, and the music band The Chainsmokers.

“People connect with faces, not text boxes,” said Ilya Sukhar, general partner at Matrix Partners. “Lemon Slice is building charismatic, interactive avatars that give every chatbot a face. It’s the natural evolution of conversational AI.”

Image: Lemon Slice