a16z discusses investing in Ideogram, a Midjourney rival.

Ideogram, a startup using AI to generate unique images, has plans to raise $75-100 million in a new funding round led by Andreessen Horowitz. Ideogram launched last month with excellent text generation in images as its main selling point.

What's going on here?

Ideogram is seeking more funding to pay for increased cloud computing capacity amid high demand and competition in AI image generation.

What does this mean?

Ideogram, founded by former Google researchers, came out swinging with an AI text-to-image generator that pulled in over 1 million users in a little over 1 month. But its viral growth has led to server capacity issues, forcing the company to pause sign-ups at times.

Ideogram is now looking to raise $75-100M to expand its computing infrastructure. This signals a $500M pre-money valuation without any revenue.

If you’re following AI launched on X, a16z looks like the compute messiah for startups (and researchers). Ideogram could get all their troubles taken away by the a16z gods (in exchange for some equity, of course).

Why should I care?

AI startups are hitting server limits faster than I finish my pizza. As demand spikes, access to capital and servers is life or death for startups like Ideogram.

Thing is, Ideogram's just one of many players in this space battling tech titans like Google, Meta, and Adobe. And not to be a buzzkill, AI images have brought up the heat again in recent weeks (DallE-3 😉).

Also, who knows what legal troubles await around copyright issues? But when has potential drama stopped money from flowing in?