Venice AI secures $65M Series A, becomes unicorn as privacy-first AI platform gains traction

Concerns about AI chatbots affecting mental health, personal safety, harassment, and misinformation have pushed developers to add safeguards that tightly control what their models can say or do.

But concerns don't kill demand. AI holds great promise, and people don't want an anonymous tech company limiting their access to that potential. If they can keep their privacy while using AI models however they like, why not?

Venice AI, which provides access to over 200 AI models while preserving user privacy, is thriving thanks to that demand. In just two years, the company has attracted over 850,000 unique visitors to its site, serves more than 3 million active users, and handles an average of 1.7 million API calls daily.

The startup hosts "uncensored" open-source models on its own data centers and routes queries to closed-source models like those from OpenAI or Anthropic. All user input is encrypted and decrypted on the client side, then routed through an external proxy before processing and return, with no data stored on Venice's systems. It also offers end-to-end encryption on some models, but that feature requires a paid subscription.

The company is already profitable, with annualized run-rate revenues exceeding $70 million, its CEO Erik Voorhees (pictured above, center) told TechCrunch in an exclusive interview.

Unsurprisingly, investors have flocked to get a share of that momentum. Venice AI announced Wednesday that it raised a $65 million Series A at a $1 billion valuation, its first external funding round. The round was led by crypto-focused venture firm Dragonfly, with participation from Coinbase Ventures, North Island Ventures, and others.

The connection between Voorhees, Venice's privacy focus, and its new crypto investors is evident, especially given the CEO's background and past work. An early bitcoin advocate, Voorhees founded several crypto companies, including bitcoin gambling site Satoshi Dice and cryptocurrency exchange ShapeShift, and has long championed user privacy.

In fact, when a Wall Street Journal investigation accused ShapeShift—which initially didn't require user identification—of processing millions in suspicious funds, Voorhees reportedly said: "I don't think people should have their identity recorded to catch an occasional criminal."

He struck a similar tone when asked how Venice AI approaches providing access to AI models in light of recent cases of AI psychosis and resulting harm, saying his team views their service as a "neutral tool or a neutral platform."

"This is the same principle as Bitcoin, where Bitcoin, as a neutral protocol, works the same way for all people," he said. "I think it's actually quite dangerous from a safety perspective for the world to enter this next phase with everyone constantly watched. To me, that is much more dangerous than any particular person asking a controversial question or something that might be considered bad."

There's also a strong focus on giving users agency. Users can freely choose from AI models that generate text, images, audio, and video—each varying in performance, quality, and the level of censorship applied. The website prominently features several AI "characters" that users can customize and chat with, and the company proudly states it offers an "uncensored" experience.

"We're optimizing for freedom and actually respecting users as adults, which is, I think, rare these days," Voorhees said.

The founder said Venice also works on some open models' system prompts to encourage more open responses, but doesn't add any restrictions to the models.

Unsurprisingly, two crypto tokens are linked to this effort. Venice launched a token called "VVV" in early January to attract users, Voorhees said, and added another called "DIEM" in August last year. Users can buy VVV and stake it to mint DIEM, which generates $1 worth of AI credits per day that can be spent on Venice. However, Voorhees noted that only about 8% of the company's users pay with crypto.

The founder attributed the company's growth to the strong performance of the crypto tokens, but said the biggest driver was reaching near feature parity with ChatGPT. "When we launched, we were far behind what ChatGPT could do, but people used us because it was private. And today, we're very close to what ChatGPT can do [...] so as we've closed that gap, it's become an increasingly compelling alternative," he said.

Looking ahead, Venice AI plans to use the fresh capital to start buying GPUs and building its own data centers, so it can stop leasing GPUs and improve its gross margins.