AI Music Startup Suno Raises $250M Despite Legal Battles with Record Labels

Legally embattled AI music startup Suno raises at $2.45B valuation on $200M revenue | TechCrunch

If you want insight into just how worried VCs (and Silicon Valley, generally) are over legal challenges to AI training on copyrighted material, look no further than AI music site Suno. Suno, which allows anyone to create AI-generated songs through prompts, announced on Wednesday that it has raised a $250 million Series C round at a $2.45 billion post-money valuation. The round was led by Menlo Ventures with participation from Nvidia's venture arm NVentures, as well as Hallwood Media, Lightspeed, and Matrix. The company offers consumer monthly subscriptions (a free tier plus $8 or $24 per month plans) and launched a version of Suno for commercial creators in September. It has now hit $200 million in annual revenue, Suno told The Wall Street Journal. It previously raised a $125 million Series B in May 2024, led by Lightspeed Venture Partners, Nat Friedman and Daniel Gross, Matrix, and Founder Collective, at an estimated $500 million valuation. But Suno has also been the poster child for AI training lawsuits by human artists. The company is battling a suit by three major record labels, Sony Music Entertainment, Universal Music Group, and Warner Music Group, which alleges Suno trained on copyrighted materials scraped off the Internet without permission. Those types of suits still reside in a legal gray zone in the U.S., and most are settled, typically by a training data licensing agreement. (Last month, Universal and Udio settled their litigation in such a way.) Suno has also faced similar legal challenges by the Danish music rights organization Koda and Germany's GEMA. GEMA, by the way, earlier this month won its suit filed in Germany against OpenAI that also challenged the legality of training on scraped copyrighted material. But given Suno's market success, growth, and the obvious potential market for AI-generated music, its legal complications are a shoulder shrug to investors. "Type an idea, click Create, and suddenly, you're not just imagining music -- you're making it. That shift from listener to creator? That's what Suno unlocks," the Menlo VCs who backed the startup describe in their blog post about the investment. Menlo didn't just like the tech, but also that Suno has grown largely through word of mouth - people sharing songs on their group texts, the investors said. No doubt the AI industry is, and will continue, to eventually work out the legal ramifications of acting first, asking for permission later, over training data. But before that's settled, the era of AI-generated music has clearly arrived.

Nvidia backs $250M funding round for AI music startup Suno - SiliconANGLE

Suno Inc., a startup with a popular music generation service, today announced that it has closed a $250 million Series C investment. Menlo Ventures led the funding round. It was joined by Hallwood Media, Lightspeed, Matrix and Nvidia Corp.'s NVentures startup fund. Suno is now worth $2.45 billion, more than quadruple the valuation it received following its last funding round. The valuation bump may signal investor confidence in the company's ability to address copyright concerns. Last year, three record labels sued Suno for allegedly using copyrighted music without permission to train its artificial intelligence models. They also sued a rival startup called Udio Inc. Two of the three record labels ended their litigation against Udio this month, a potentially positive sign for Suno. Massachusetts-based Suno provides a freemium music generation service of the same name. Users can generate a track by specifying its lyrics, genre and whether the vocals should be accompanied by instruments. Suno also makes it possible to upload reference audio as part of the customization workflow. The company generates revenue with two paid product tiers offer more features. There are higher usage limits and additional editing options, including the ability to replace specific sections of a track with external audio. Suno's most expensive subscription, the Premier plan, starts at $24 per month. It includes a so-called digital audio workstation called Suno Studio. A digital audio workstation is a virtual version of the specialized computers musicians use to record and mix tracks. Many AI music generators are powered by an algorithm derived from the transformer architecture, the go-to design for large language models. In some cases, the transformer is integrated with a second AI called an autocoder. The autocoder turns raw audio into a compressed mathematical representation that is easier to process. In theory, a music generator can process raw audio directly without using a compressed representation. However, the complexity of music files can make that approach impractical. A single four-minute song comprises 10 million data points called timesteps that have to be processed individually if they're not compressed by an autocoder. Suno disclosed today that nearly 100 million users have signed up for its platform to date. According to the Wall Street Journal, the company is generating about $200 million in annual sales. Most of that revenue comes from subscriptions to Suno's paid tiers. The demand for music generators could draw the attention of larger AI providers such as OpenAI Group PBC, which is no stranger to the technology. In 2020, it open-sourced a music generation algorithm called Jukebox. OpenAI's considerable financial resources may enable it to secure training data licensing deals with major record labels.

Despite Being Sued by Nearly Every Record Label, This AI Startup Just Hit a $2.45 Billion Valuation

Controversial AI-powered music generation platform Suno has raised $250 million at a $2.45 billion valuation. Suno was founded in 2023 by four former employees of Kensho, an AI startup that was acquired by S&P Global in 2018. The platform, which can be accessed either via website or through a mobile app, allows users to create professional-sounding songs with just a short text prompt. The platform has been incredibly popular. According to The Wall Street Journal, Suno's annual revenue has reached $200 million, mostly from subscriptions. Free users get a small number of "credits" each day to create a handful of songs. By paying $10 per month, users get thousands of credits each month, and gain access to more advanced AI models. The music that Suno's AI models create can be uncanny, often sounding near-indistinguishable from human-made songs. Check out this ska-punk love song I generated in less than a minute. But the way that Suno went about collecting data in order to train those models has rankled many in the music industry. In 2024, major record labels including UMG, Sony Music, and Warner Music, sued Suno, alleging that the company had illegally trained its models on copyrighted music without permission. In response, Suno confirmed that its models are trained on millions of recordings, but argued that these models shouldn't be treated any differently from a human musician, as both learn to create music by listening to music. Because of this, Suno says its training process is protected by fair use. The case is still ongoing, but Suno has attempted to smooth out its relationships with the major labels by hiring Paul Sinclair, former general manager of Atlantic Records, as its first chief music officer. The company has also recently introduced Suno Studio, a version of the platform built with advanced customization options, made specifically for professional music producers. One of Suno's most notable competitors, a startup named Udio, has taken a decidedly different legal strategy. In the past few weeks, Udio has settled lawsuits with Universal Music and Warner Music, and announced deals to officially license music from both labels. The $250 million series C round was led by Menlo Ventures, with participation from NVenture, the venture capital arm of Nvidia. In a statement, Suno cofounder and CEO Mikey Shulman said that "this funding enables us to accelerate what we're building: more sophisticated tools for professionals, more delightful experiences for casual creators, and new ways for people to share and connect socially through music." The final deadline for the 2026 Inc. Regionals Awards is Friday, December 12, at 11:59 p.m. PT. Apply now.

AI Music Platform Suno Secures $250 Million in Funding, Reports $2.45 Billion Valuation

Billy Idol Shares New Song "Dying to Live" for Upcoming Doc 'Billy Idol Should Be Dead' (Exclusive) Suno, the most prominent artificial intelligence music generation platform in the industry, has announced the close of a $250 million funding round, a deal that the company says values Suno at about $2.45 billion. The round was led by Menlo Ventures, the prominent Silicon Valley venture capital firm whose portfolio includes companies like Chime, Roku and Uber as well as prominent AI company Anthropic. Others participating in the round were NVIDIA's venture capital arm NVentures, as well as Lightspeed, Matrix and Hallwood Media. Hallwood -- led by longtime music executive Neil Jacobson -- signed a first-of-its-kind record deal with a Suno music creator earlier this summer, while another of its AI signees, Xania Monet, had garnered headlines after getting several songs on some of Billboard's charts. "We're seeing the future of music take shape in real time," Mikey Shulman, co-founder and CEO of Suno, said in a statement. "In just two years, we've seen millions of people make their ideas a reality through Suno, from first-time creators to top songwriters and producers integrating the tool into their daily workflows. This funding allows us to keep expanding what's possible, empowering more artists to experiment, collaborate, and build on their creativity. We're proud to be at the forefront of this historic moment for music." Suno still faces a significant legal battle with the major record labels, who sued the company last year on allegations of mass copyright infringement over the use of the companies' catalogs to train Suno's AI model. Rumors have swirled of potential settlements in recent months, while Suno rival Udio settled with Universal Music Group at the end of October. Udio's settlement with UMG appears to mark a change in Udio's business model from pure text-to-music generation toward a more fan-interactive offering where users can engage with artists' music for remixes and mashups. (Udio still faces lawsuits from Sony and Warner Music Group.) Whether Suno would make any such change remains to be seen, though this funding round makes that seem unlikely. "Suno is the world's number one music creation app, making music accessible to everyone," Menlo Ventures partner Amy Martin said in a statement. "Mikey and the team have built something people genuinely love using and millions of fans are on the platform every day, creating original songs and sharing them with friends."