Venice AI Secures $65M Funding at $1B Valuation to Accelerate Private AI Expansion

Venice AI, the artificial intelligence startup focused on privacy and decentralization, has secured $65 million in its first institutional funding round, reaching a $1 billion equity valuation as it prepares for its next phase of growth.

The Series A investment was led by Dragonfly and included participation from North Island Ventures, Coinbase Ventures, F-Prime, Archetype, Liquid2 Ventures, Morgan Creek, and several other venture firms. According to founder Erik Voorhees, investors received an 8.98% ownership stake in the company along with 1.5 million Venice (VVV) tokens that will vest over time. They also obtained warrants allowing them to purchase an additional 5 million VVV tokens over the next eight years.

If all warrants are exercised, Venice AI would receive roughly $66.5 million in additional capital, bringing the total funding tied to the round to approximately $131.5 million. Both the token allocation and warrants are subject to a one-year lockup before vesting gradually over the following three years.

Founded more than two years ago, Venice AI has positioned itself as an alternative to traditional AI platforms by emphasizing user privacy and unrestricted access. The platform says it does not retain user prompts on its own servers, encrypts requests before routing them through external infrastructure, and offers end-to-end encryption for select premium models. Users can choose from more than 200 AI models, including self-hosted open-source systems as well as anonymous access to leading closed-source models through APIs.

The company revealed that it surpassed 3 million users earlier this year and has already achieved profitability despite operating in a highly competitive AI market. Venice AI also reported annualized revenue exceeding $70 million, highlighting growing demand for privacy-focused AI services.

According to Voorhees, the decision to seek outside funding was driven by ambitions to transform Venice into a large-scale consumer AI platform capable of serving hundreds of millions of users and billions of AI agents. He said achieving that vision requires significant investment in infrastructure and expansion.

A large portion of the newly raised capital will be dedicated to building Venice's own computing resources, including its first proprietary data center. By reducing dependence on leased GPU capacity, the company aims to improve operational efficiency, secure long-term computing availability, and increase profit margins. Additional funds will support international expansion, strategic acquisitions, hiring, and broader customer growth.

Rather than selling its treasury holdings of VVV tokens to finance expansion, Venice AI chose to raise capital through equity. Voorhees explained that the company remains the largest holder of the VVV token, controlling more than 30 million tokens from a circulating supply of just over 80 million. He also stated that neither the company nor its team has sold any VVV despite the token's substantial appreciation this year.

Voorhees added that Venice intentionally delayed venture fundraising until both its AI platform and token ecosystem were already established. He contrasted this approach with projects that secure venture backing before launching products or attracting users, saying Venice wanted to prove real-world adoption first.

Should investors fully exercise their token warrants, approximately 6,000 VVV tokens would enter circulation each day beginning about a year from now. Voorhees noted that this would represent only a small fraction of the token's current daily trading volume. Any unexercised warrants would leave those tokens in the company's treasury.

Venice AI also confirmed that its long-term token strategy remains intact. The company plans to continue allocating part of its revenue toward buying back and burning VVV tokens while gradually reducing token emissions. Alongside VVV, Venice operates the DIEM token, which users can mint by locking staked VVV. Each DIEM functions as a permanent $1 API credit that can be redeemed for services on the Venice AI platform.