Chatbot Startup Character Seeks $250 Million, Testing Investor Appetite for AI

Character, an AI chatbot startup founded by two former Google researchers, has told investors it wants to raise as much as $250 million in new funding, according to two people with direct knowledge of the matter. The pitch will test investors’ appetite for machine-learning startups as Microsoft’s multibillion-dollar deal with OpenAI casts a halo over the sector.

A funding round of that size indicates the startup is aiming for a valuation of at least $1 billion, according to one of the people familiar with the new discussions, a striking price for a startup with a product still in beta. Character has met with several VC firms, including Sequoia Capital. But the talks are still in their early stages and it’s not clear how successful they will be, given the newness of its product and the high costs of funding AI development.