Character.AI in Talks to Raise Funding as Meta Platforms Tests Rival

Character.AI, which lets users create artificial intelligence–powered chatbots modeled after figures like TV character Tony Soprano and Tesla CEO Elon Musk, is in talks with investors about raising an additional round of funding, according to a person with direct knowledge. The discussions come just four months after Character.AI said it had raised $150 million at a $1 billion valuation.

New capital could help the 20-month-old startup support skyrocketing demand for its chatbots, which rely on computing-intensive models to deliver responses. At the same time, the 30-person startup is facing pressure to keep millions of users engaged, especially as larger tech companies nip at its heels. Meta Platforms, for instance, has been testing a Character.AI-like product that enables people to chat with avatars who assume different personas, such as Abraham Lincoln, according to a person with direct knowledge of the product.