Venice AI reaches unicorn status with $65M Series A as privacy concerns fuel growth

Venice AI becomes a unicorn with $65M Series A as its privacy-first AI platform takes off

Concerns over the impact of AI chatbots on mental health, personal safety, harassment, and disinformation have forced AI developers to implement safeguards to better control how and what their AI models are allowed to respond or do. But concerns and worries can't erode demand. AI offers a lot of promise, and people don't want a faceless tech company to restrict their access to that potential. And if they can preserve their privacy while they use AI models however they want, why not? Venice AI, which offers access to more than 200 AI models while allowing users to retain their privacy, is raking it in thanks to that demand. Just two years in, the company already has more than 850,000 unique visitors to its website, and serves more than 3 million active users and an average of 1.7 million API calls per day. The startup hosts "uncensored," open-source models on its own data centers, and routes queries to closed-source models, such as those by OpenAI or Anthropic. All user input is encrypted and unencrypted client-side, and routed through an external proxy before it is processed and returned, with no data stored on Venice's own systems. It also provides end-to-end encryption on some models, though you have to pay for a subscription to get that feature. The company is already profitable, with annualized run-rate revenues of over $70 million, its CEO Erik Voorhees (pictured above, in the center) told TechCrunch during an exclusive interview. Understandably, investors have flocked to get a piece of that traction. Venice AI on Wednesday said it had raised a $65 million Series A at a $1 billion valuation, its first external fundraise. The round was led by crypto-focused venture firm Dragonfly, with participation from Coinbase Ventures, North Island Ventures, and others. The overlap between Voorhees, Venice's focus on privacy, and its new crypto investors is hard to miss, especially given the CEO's background and past work. An early bitcoin advocate, Voorhees has founded a few crypto companies, including bitcoin gambling site Satoshi Dice and cryptocurrency exchange ShapeShift, and has long advocated in favor of preserving users' privacy. In fact, when a Wall Street Journal investigation accused ShapeShift, which initially didn't require its users to identify themselves, of processing millions of suspect funds, Voorhees reportedly said: "I don't think people should have their identity recorded to catch an occasional criminal." He struck a similar note when asked how Venice AI thinks about offering access to AI models in light of recent cases of AI psychosis and resulting harm, saying his team treats their service as a "neutral tool or a neutral platform." "This is the same principle that you have in Bitcoin, where Bitcoin, as a neutral protocol, works the same way for all people," he said. "I think it's actually quite dangerous from a safety perspective, for the world to enter this next phase and have everyone be constantly watched. To me that is actually much more dangerous than any particular person asking a controversial question or something that might be considered bad." There's a considerable focus on giving users agency, too. Users can freely choose from AI models that can generate text, images, audio, and video -- all of which vary in their performance, quality, and the amount of censorship applied. The website prominently features several AI "characters" that you can customize and chat with, and the company proudly states it offers an "uncensored" experience. "We're optimizing for freedom and actually respecting users as adults, which is, I think, rare these days," Voorhees said. The founder said Venice also works on some open models' system prompts to instruct them to answer more openly, though it doesn't add any restrictions to the models. Unsurprisingly, there are two crypto tokens associated with the effort. Venice launched a token called "VVV" in early January, in a bid to attract users, Voorhees said, and in August last year added another, called "DIEM." Users can buy VVV and then stake it to mint DIEM, which generates $1 worth of AI credits per day that you can spend on Venice. However, Voorhees said only about 8% of the company's users pay with crypto. The founder credited the company's growth to the good performance of the crypto tokens, though he said the strongest driver was getting close to feature parity with ChatGPT. "When we launched, we were very far away from what ChatGPT could do, but people would use us because it was private. And today, we're very close to what ChatGPT can do [...] so as we've closed that gap, it's become an increasingly compelling alternative," he said. Looking forward, Venice AI wants to use the fresh cash to start buying GPUs and building its own data centers so it can stop leasing GPUs and increase its gross margins.

Private AI: Venice.ai, led by crypto vet Erik Voorhees and Seattle's Jesse Proudman, raises $65M

Venice.ai, a privacy-focused AI startup with strong Seattle ties, has raised $65 million in its first outside funding, valuing the 2-year-old company at $1 billion. The company positions itself as a private and unrestricted alternative to mainstream AI services, offering access to a range of open-source and commercial AI models. Venice says it doesn't log or store users' prompts and responses on its servers, keeping conversations on people's own devices. It also strips out many of the content filters built into competing tools. The Series A round, announced Wednesday morning, was led by Dragonfly, a crypto-focused investment firm, with participation from North Island Ventures, Coinbase Ventures, Archetype, Morgan Creek, Liquid2 Ventures and Seattle-based Founders' Co-op. The company was founded in 2024 by crypto entrepreneur Erik Voorhees, its CEO, who runs the company from San Francisco. Voorhees founded the crypto exchange ShapeShift and has long argued against heavy government regulation of cryptocurrency. Seattle tech veteran and serial entrepreneur Jesse Proudman is Venice's president, CTO and co-founder. The two met as classmates at the University of Puget Sound in Tacoma. "We want Venice to be thought of in the consumer landscape on the same terms as a ChatGPT or an Anthropic," Proudman said in an interview. "We want people to open their phones and have our app sitting alongside those apps." The case for privacy comes from how people are starting to use AI. As chatbots become go-to tools for sensitive matters -- medical questions, legal issues, job negotiations, relationship advice -- users hand over intimate details that accumulate in the databases of companies like OpenAI and Anthropic. That data, Proudman said, is only as safe as the company holding it. "It only takes one breach, one disgruntled employee who is going through that data, a government subpoena, a change in government policy -- and then all of that data no longer is private to you," he said. "It can be health records, it can be legal questions, it can be job negotiations, it can be relationship advice." Venice's answer is to create no central trove to breach or subpoena in the first place. Marketing AI with fewer restrictions can make Venice more useful in some cases, but it also raises the misuse questions that lead mainstream services to build in guardrails in the first place. Proudman said Venice includes some safeguards to prevent abuse and illegal activity. The company nonetheless bills itself as an "AI safety company," casting the surveillance of users' thoughts -- rather than the content of their prompts -- as the greater danger. Proudman is based in Seattle, where he has spent more than two decades starting and selling technology companies. He founded cloud-computing company Blue Box, which IBM acquired in 2015, and crypto trading startup Strix Leviathan, acquired by hedge fund Parataxis in early 2025. Strix spun out Makara, a crypto investing startup, in 2021, and Betterment acquired Makara the following year. Proudman spent about three years as a VP at Betterment, where he started moonlighting on Venice in 2024 -- building it nights and weekends before leaving to go full-time. Venice says it reached 3 million users in April and turned profitable in the first quarter. "That hockey stick that we always hear about, and that I've spent 25 years trying to build companies to find, finally manifested," Proudman said. Venice makes money through consumer subscriptions and paid access to its developer API. It also has its own cryptocurrency, the VVV token, which developers can buy and lock up to reserve a share of the company's computing capacity instead of paying per use. Proudman said Venice will use the funding to build its own data center infrastructure -- owning the GPUs that power its service rather than renting computing capacity -- and to invest in growth as it tries to establish itself as a mainstream consumer brand. The company has grown to about 45 employees, up from roughly 15 people a year ago, with six in Seattle. It operates as a remote team and doesn't currently have an office. Whether Venice expands its Seattle footprint long-term may hinge on state politics. Proudman has publicly opposed Washington's new 9.9% "millionaires tax" -- a state income tax on household income above $1 million that was signed into law in March and takes effect in 2028 -- and said he won't stay in the state if it does. He's pinning his hopes on a repeal campaign that backers are trying to get on the November ballot. "I love it here ... Seattle is a unique and phenomenal place to build a company, and I've been building companies here my entire life," Proudman said. "I want to see us continue to be competitive against the Bay Area."

Venice AI Valued at $1 Billion as Erik Voorhees Makes the Case for Private ChatGPT Rivals

Voorhees argued AI surveillance -- not model capability -- is becoming the industry's defining challenge. Venice AI has raised $65 million in its first outside funding round at a $1 billion valuation, founder Erik Voorhees announced Wednesday. In a post on X, Voorhees -- a cryptocurrency industry veteran who is best known as the founder of the ShapeShift exchange -- said the funding validates Venice's mission to build a private, uncensored alternative to mainstream AI like ChatGPT. "This aversion to ubiquitous centralized surveillance and control is our philosophical foundation, and upon it Venice is growing rapidly," Voorhees wrote. "In April, we hit 3 million users, and as of Q1, in an environment where AI firms were losing money while spying on you, Venice became profitable while choosing not to." Launched in May 2024, Venice AI is a privacy-focused alternative to mainstream AI chatbots that is designed to avoid storing users' conversations on centralized company servers. The round was led by Dragonfly, with participation from North Island Ventures, Coinbase Ventures, Archetype, Liquid2 Ventures, and Morgan Creek. Venice AI native token (VVV) rose following the funding announcement and is currently trading at $13.74, up 11% over the last 24 hours, according to CoinGecko. VVV emissions were also trimmed Wednesday to 3 million per year, which are awarded to token holders who stake their VVV to support the network. That means fewer tokens are added to the supply each year. While AI developers, including Anthropic's Dario Amodei and OpenAI's Sam Altman, have warned about the risks related to frontier models, Voorhees argued the industry's focus on job displacement and cybersecurity overlooks what he sees as a more fundamental threat: the erosion of privacy as AI reshapes the relationship between people and their own thoughts. "Perhaps it is not job losses or cybersecurity incidents that should most frighten us, but rather that our flow of consciousness is increasingly under examination -- our thoughts are now constructed in tandem with and at the permission of this dystopian apparatus," he wrote. Voorhees said the new funding will be used to expand Venice's platform, which provides access to leading open-source and proprietary AI models through a single interface and API, while advancing what he described as First and Fourth Amendment protections for human interaction with AI. "We will construct the platform dedicated to private and unrestricted machine intelligence; an open, permissive port city that respects the sovereignty of its inhabitants, both human and agentic," he said. The announcement comes as AI privacy is drawing increased attention in Washington. Earlier this year, lawmakers introduced legislation to require warrants for AI-assisted government surveillance, while the FBI has expanded its use of AI for investigations, threat analysis, and facial recognition.

Venice AI raised $65M to exploit OpenAI's blind spot

AI chatbots increasingly receive information that people would hesitate to share with colleagues, healthcare providers, or even search engines. Questions about health, finances, and legal matters are routinely entered into these systems, often with little consideration of where that data is stored, processed, or used. Six major United States AI companies collect those conversations and feed them into their training models by default, a Stanford University study found. One startup is betting that the gap between what users assume and what platforms do with that data is the biggest opening in AI. Venice AI closed a $65 million Series A at a $1 billion valuation, its first outside funding since launching in 2024. The company, co-founded in 2024 by crypto entrepreneur Erik Voorhees and Seattle-based tech veteran Jesse Proudman, has surpassed more than 3 million users while declining to store any prompts or responses on its own servers, GeekWire reported. Venice AI's first outside funding round values the company at $1 billion Venice provides access to more than 200 AI models, including those built by OpenAI and Anthropic, through a single consumer interface and developer application programming interface. The core difference from those competitors is architectural: all user inputs are encrypted and decrypted on the user's own device, routed through an external proxy, and never retained on Venice's infrastructure, TechCrunch reported. The company turned profitable during the first quarter of 2026 and is now generating annualized run-rate revenues above $70 million, CEO Erik Voorhees told TechCrunch. OpenAI, by comparison,is leaning toward delaying its potential initial public offering into 2027 rather than listing below a $1 trillion valuation, according to The New York Times. How Venice generates $70 million in revenue without storing your data Venice makes money through consumer subscriptions and paid developer API access, without harvesting user conversations for training or advertising, according to the company's privacy documentation. Venice also operates two cryptocurrency tokens, VVV and DIEM, though only about 8% of users pay with crypto, TechCrunch noted. The startup has grown from roughly 15 employees a year ago to about 45 today, processing an average of 1.7 million API calls daily. Venice plans to use the new capital to build its own graphics processing unit (GPU) infrastructure rather than continuing to lease computing capacity, a move designed to improve gross margins over time, TechCrunch reported. Francesco Carta fotografo/Getty Images Stanford researchers say the AI privacy gap is not theoretical The vulnerability Venice targets has academic backing. Researchers at Stanford's Institute for Human-Centered Artificial Intelligence analyzed six frontier AI companies and found that all six use customer chat data by default to improve their models, with some retaining information indefinitely. Jennifer King, Privacy and Data Policy Fellow at Stanford's Institute for Human-Centered AI, said hundreds of millions of people are using AI chatbots that collect personal data for training. We have hundreds of millions of people interacting with AI chatbots, which are collecting personal data for training, and almost no research has been conducted to examine the privacy practices for these emerging tools. Some companies allow human reviewers to read users' chat transcripts for training, the Stanford team found. A question about a health condition or a legal dispute can flow into a model's training data, influence future outputs, and become vulnerable to subpoenas or breaches. AI privacy legislation gains momentum in Congress Federal lawmakers are starting to address the regulatory void. Representatives Thomas Massie and Lauren Boebert introduced the Surveillance Accountability Act in April 2026, which would require warrants before federal agencies access third-party digital data, Rep. Lauren Boebert's office confirmed. Naomi Brockwell, founder of the privacy nonprofit Ludlow Institute, helped draft the bill and warned that AI has fundamentally expanded the scale of government surveillance. The Federal Bureau of Investigation has separately expanded its use of AI for investigations and facial recognition, according to the Department of Justice's 2025 AI use case inventory. Venice AI's crypto roots and what the $1 billion valuation signals Privacy debates are familiar territory for Voorhees, who founded ShapeShift, a cryptocurrency exchange that initially allowed users to trade without identity verification. Voorhees has long argued against government surveillance of digital transactions. After a Wall Street Journal investigation into ShapeShift's identity practices, he told the paper, "I don't think people should have their identity recorded to catch an occasional criminal," TechCrunch reported. Proudman previously founded cloud-computing company Blue Box, which IBM acquired in 2015, and crypto startup Strix Leviathan, acquired by hedge fund Parataxis in early 2025, GeekWire reported. Proudman framed the privacy risk in concrete terms. "It only takes one breach, one disgruntled employee who is going through that data, a government subpoena, a change in government policy, and then all of that data no longer is private to you," he told GeekWire. TechCrunch noted the overlap between Voorhees's crypto background and Venice's new backers, with Dragonfly, Coinbase Ventures, and Morgan Creek all managing significant cryptocurrency portfolios. Whether Venice can convert that base into a mainstream consumer brand will determine if the $1 billion valuation holds as the AI privacy market evolves. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published July 3, 2026 at 3:33 PM.