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Pika Labs Secures $80 Million Amid Stagnant Growth

Source from Business Insider and The Washington Post

Pika Labs, an AI video generation startup founded by Chinese entrepreneur Demi Guo, is currently raising approximately $70 million in its latest funding round. The post-funding valuation of the company is projected to be between $500 million and $700 million, with participation from Spark Capital, Lightspeed, and Greycroft. However, The Washington Post reports that the funding amount is actually $80 million.

Prior to this round, Pika Labs had completed three funding rounds totaling $55 million. If this round concludes successfully, the company’s total funding will reach between $125 million and $135 million. Regardless of the exact figure, this represents the highest funding amount for an AI video product to date.

Despite this significant fundraising, Pika Labs faces considerable challenges.

Launched on Discord in July last year, Pika introduced its web-based video generation tool, Pika 1.0, in November. Initially, the tool’s impressive video generation capabilities, coupled with the founder’s persona as a “Chinese beauty and academic prodigy,” attracted significant media attention and rapid website traffic growth, which increased 2.3 times within a month.

pika labs co-founder Demi Guo is IOI Silver Medalist
pika labs co-founder Demi Guo is IOI Silver Medalist

However, after the initial hype subsided, Pika’s website traffic plummeted. According to Similarweb, the site’s traffic in April was a mere 2 million visits, only 400,000 more than in November and a 64% decrease from its peak.

Currently, Pika can only generate 4-second HD videos, which can be extended indefinitely, but still does not differentiate it significantly from competitors. The quality of its generated videos is average, and newer competitors like Pixverse, launched three months later, offer similar quality. This lack of technological edge has led to user attrition and difficulty in market penetration.

To address these issues, Pika has introduced new features to broaden its application scenarios. One notable feature is the addition of style options in video generation, allowing users to choose from seven different styles, including Anime, Gloomy, 3D, Watercolor, Natural, Clay Animation, and Black & White. Users can also change the style in the video modification function, achieving a “video style redraw” effect.

However, this feature essentially alters the video by updating the prompt, making the secondary video generation unpredictable and less practical for real-world application.

Another genuine addition is the audio generation feature, where AI identifies video content and adds appropriate sounds, introducing a new modality beyond video. Yet, user tests indicate that the generated audio often mismatches the video content, reducing its practicality. To address this, Pika now generates three audio tracks for users to choose the most suitable one.

Beyond enhancing its core video generation functions, Pika has collaborated with ElevenLabs to introduce a Lip Sync feature. This combines “audio generation + video lip-sync,” similar to HeyGen’s “video translation” feature. User tests show that while the audio quality is good, the lip-sync appears unnatural, clearly revealing its AI origins. Additionally, this feature does not strongly relate to Pika’s main video generation capabilities.

Pika co-founders, Chenlin Meng (left) and Demi Guo (right)
Pika co-founders, Chenlin Meng (left) and Demi Guo (right)

On the commercialization front, aside from a collaboration with Adobe to integrate with Sora and Runway into Adobe’s suite, Pika has made little progress. Observers note that while Chinese entrepreneurs typically have insightful approaches to AI video generation applications, Pika seems to be an exception.

The high funding amount Pika has secured is surprising given its lackluster performance over the past six months. Although the founder has claimed that they have built their foundational model and can train it at a lower cost, no longer relying on other AI technologies, Pika has yet to demonstrate significant progress in user data, video length and quality, or commercialization efforts.

Sylvia G

Reporter at Firmknow News. U.S. IPOs, consumer and private equity deals. Preemptively skeptical. My opinion belongs to me.

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