TheChek News Flow

Valuations of generative artificial intelligence startups appear to be coming down—slightly.

The latest example is Synthesia, which helps companies create AI videos. It’s raising $150 million in funding at a valuation of $2.1 billion after the investment, double its valuation from 17 months ago, according to a person involved in the deal. While the valuation may seem high, it’s actually far lower than valuations many startups were getting earlier this year and last year, as a multiple of their revenue.

Synthesia is generating more than $70 million in annual recurring revenue, according to the person involved in the deal, which implies it is currently generating at least $6 million in revenue per month. That means the new valuation would be 30 times the startup’s forward revenue. Its revenue growth rate couldn’t be learned.

By comparison, a year ago, forward revenue multiples closer to 100 seemed commonplace. At the start of the year, for instance, eight prominent generative AI funding deals gave startups an average forward revenue multiple of 83.

Last week, two other AI-related startups that do business with OpenAI were nearing equity financing deals that would value them at roughly $2 billion, or around 50 times their forward revenue. OpenAI’s own valuation multiple on forward revenue was recently between 30 and 40 in a recent deal, but that’s to be expected of a company whose $150 billion valuation is higher than those of most public companies.

Part of the apparent valuation comedown may reflect intensifying competition. In AI video, major developers such as OpenAI and Google are building competing products, and there are at least 16 AI video startup rivals, according to the Generative AI Database. One of the startups, Runway, recently signed a high-profile deal to use content from movie studio Lionsgate to develop its video models.

Founded in 2017, Synthesia was one of the earliest beneficiaries of the rise of generative AI technology in recent years. Unlike some AI app developers, Synthesia develops its own video generation models based on diffusion, a type of machine learning model. It also differs from AI video rivals because it sells its product primarily to businesses rather than to individuals or video producers.

Customers use Synthesia to create videos using human avatars of their choosing. The AI avatar can read from a script to train salespeople or update employees on new benefits, for instance. Some customers, such as German sales tech firm Doculife, also use the technology to produce video demonstrations of their products that they post on their consumer websites.

With Synthesia’s product, customers can write text and record their own voice, which the AI avatar then uses for the video. The company has a free and paid version of its product with tiered subscription prices based on how many AI avatars a customer wants to make or how many minutes of video they want to create per year. The company is focusing on medium to large enterprises, and says its customers include Zoom, Spirit Airlines and Xerox.

The AI avatar and video field has become more crowded since Synthesia’s earlier days. Up-and-comers such as Pika Labs and HeyGen have raised hundreds of millions in funding in the last two years. (HeyGen’s valuation multiple on forward revenue was 22 as of March, but that likely reflected a discount due to the startup’s potentially problematic ties to China.)

London-based Synthesia, which will have a higher valuation than both if the round is closed, has previously raised $150 million in funding rounds led by Accel, Kleiner Perkins and FirstMark.

Venture capital firm New Enterprise Associates has agreed to lead the new funding round in Synthesia, the person involved in the deal said. Spokespeople for Synthesia and NEA declined to comment.

The deal would continue NEA’s spree of AI investments. The firm has previously led or co-led investment rounds in startups including search engine Perplexity and Japanese AI developer Sakana.

NEA also led an investment in another AI video startup, Genmo, in October. Venture firms have increasingly invested in rivals within the same generative AI sector.

From founder and CEO to partner at L Catteron, Whitney Casey talks about her perspective and ushering in investing 2.0.

As a prior Emmy-winning newscast journalist, founder and chief executive officer, Whitney Casey aimed to bring a fresh perspective to her role as a partner at L Catteron. From the way investors work with founders to untapped industries that have enormous potential despite being largely ignored in the past (like women’s health), Casey is leading the future of CPG investments with an investor 2.0 mentality.

One of a few women venture partners at L Catteron, Casey said she is creating a new category of investors. Her investments highlight her diverse background informed by her previous roles as the founder and CEO of Finery and cofounder of Tally Health and include work with Stripes, WTHN and Alice Mushrooms, along with other women’s health businesses.

Here, Casey talks to WWD about the future of investing and areas where she sees growth.

Whitney Casey: We’re in the thick of it for CPG and it’s a fascinating crossroads because on one hand, we’ve seen unprecedented growth fueled by consumer demand. It’s demand for things like [those] buzzwords: sustainability, wellness-oriented products, and brands are pivoting toward functional ingredients which is this huge trend of transparency and lifestyle alignment. We’ve also heard a lot about, clean beauty, which is table stakes now.

But the market is super saturated, so consumer demand for all of those things is high, the market is supersaturated and legacy brands are just struggling to remain agile. And with scaling younger brands, the pattern is so much tougher than it used to be. Now it is so different. The channels are so fragmented. There are so many different channels and they’re fragmented and hard to reach the customer.

And there is skyrocketing customer acquisition cost. We’re not talking about it going up 10 percent year-over-year, it’s maybe 100 percent year-over-year. Those things are hitting CPG, even though demand is up. If you’re a new brand, or you’re trying to break through the noise, it is very hard.

W.C.: If you think about the way that valuations were sky high during the pandemic — meaning what investors would pay to invest in a company during the pandemic — that’s all normalizing and we’re in an environment where profitability, not just grow at all costs, is the priority.

This shift in the fundamentals of these businesses is forcing brands to be sharper about product market fit and operational discipline is key. That weeds out trend chasers and highlights those businesses with staying power when you have real working unit economics. Now, you need to start businesses that have such great fundamentals and great unit economics, otherwise they’re not investable.

W.C.: I think there are some glaring blind spots, because even most innovative brands haven’t seen them, or investors could be missing them. I think it’s female-focused categories. You don’t have to be a female it’s not about being a female investor to recognize those, but 80 percent of consumer dollars is spent by women. So, let’s start focusing on what women need.

Women’s focus categories like fertility, menopause, sexual wellness and women’s health, in general, are often underfunded and poorly understood. Right now it’s super fragmented because there’s so many little businesses that have started up in this space. We’re going to need to see these businesses mature and become bigger businesses, so that there can be growth rounds and then exits and private equity rounds after that.

It’s so shocking that menopause happens to everyone and yet has not been addressed. Fertility in 17 states is required to have fertility benefits. These are all super interesting things. There’s an overemphasis on sustainability, DTC and wellness, but there are meaningful niches inside of those. I think that is just where there’s a massive upside for those willing to invest in these underserved markets early.

W.C.: What I’m trying to find on my team and the people that I look to, and what my firm has started to believe in, is that ability to balance both vision and execution or operational excellence. And that’s essentially what you’re balancing when you start looking at companies. You’re looking at the team and then the unit economics. Does this business have a solid business? Is it meeting an addressable market?

My experience allows me to help founders spot market opportunities early and then recalibrate when necessary. And what’s important about that is in a tough market — like we’re in now — you have to be able to be malleable, and it becomes even more important.

We’re not in this era where capital is free-flowing. It was bonkers in 2021 and valuation was not that important. Now, investors need to look through a different lens, and that’s finding new ways to scale companies, combining companies to create more value, and being flexible and resourceful. You are always told as a founder, you need to be resourceful, but I also think as an investor, you need to be resourceful because access to funding is so tight.

[It’s about being] smarter about how we’re going to go about this growth project and we have to be pretty clever about it.

Having fundraised myself, I think I uniquely understand the challenges of getting investors to buy into your vision. Storytelling is everything in fundraising. That’s what founders and investors do well. If you have to get your company to raise money, you have to be good at helping them craft that story for a room full of people who don’t use their product.

W.C.: We could just maybe embrace a little bit more empathy and long-term thinking into investing. And investors need to adopt a builder’s mindset, understanding that pivots and recalibrations are just part of the process, not signs of failure. We have to be able to educate our audiences and look for opportunities that are not, that aren’t sort of binary, that aren’t like so obvious.

For instance, I looked we really liked the longevity category, and there weren’t a whole lot of businesses that we liked in the category so instead, I said, well, here’s this amazing scientist from Harvard, David Sinclair, and he’s solving the problem. Let’s find a commercially viable solution, and let’s build a business around him. We created a new business and incubated it at L Catteron and we grew that business.

Typically, we see a company, it’s doing well, we put money in, it does better, right? But in a market that’s super challenged, you have to look at different opportunities differently. I think that’s investor 2.0.

Jean-Jacques Guiony, previously chief financial officer, will helm the business unit with Alexandre Arnault deployed as deputy chief executive officer.

It’s all change at the wines and spirits division of LVMH Moët Hennessy Louis Vuitton.

Jean-Jacques Guiony, the French luxury giant’s longtime chief financial officer, is to become president and chief executive officer of the division, known as Moët Hennessy, with Alexandre Arnault joining him as deputy CEO.

Since 2021, Arnault has been executive vice president of product, communication and industrial at Tiffany & Co. in New York, ramping up the American jeweler’s profile with attention-getting campaigns, buzzy ambassadors and new product ranges like its hit Lock line.

His successor at Tiffany has yet to be named.

Bernard Arnault, chairman and CEO of LVMH, revealed the shakeup early Thursday, also appointing Charles Delapalme, previously managing director at Christian Dior Couture, as president and CEO of Hennessy. A 19-year veteran of the group who has worked in senior retail and wholesale executive roles at Louis Vuitton and Fendi, his start date was not specified.

Guiony succeeds Philippe Schaus, who was been with LVMH for 21 years in various roles. Before Moët Hennessy, Schaus helmed travel retail operator DFS Group, and he has also worked at flagship brand Louis Vuitton, including a stint as president of the brand in Europe.

According to LVMH, Schaus “has decided to begin a new chapter in his career, focusing on nonexecutive roles. He will, in particular, support the new team during the first half of 2025, sharing his responsibilities in the sector.”

Not only a wiz with figures, Guiony is a wine aficionado with specialist knowledge, having quietly served as chairman of Vins d’Exception at LVMH, which includes the estates Clos des Lambrays, Château d’Yquem, Château Cheval Blanc and Colgin Cellars.

Guiony added president of Paris Match earlier this year to his portfolio of titles, which also includes chairman and CEO of Samaritaine Paris.

At Hennessy, billed as the world’s largest cognac brand, Delapalme succeeds Laurent Boillot, who will remain for a transition period and his “new responsibilities will be announced at a later date.”

The flurry of appointments underscores the French group’s deep bench of management talent, and preference to promote from within.

It also continues a tradition of management tandems between trusted LVMH veterans and Bernard Arnault’s five children, all of whom work at the luxury group.

Alexandre Arnault, who worked closely with Tiffany CEO Anthony Ledru, will team with Guiony to improve fortunes at Moët Hennessy, applying knowledge he accrued in previous roles as CEO of German luggage firm Rimowa, and family investment arm Agache, where he focused on digital innovation and tech investments.

Arnault started his career at consultancy McKinsey & Co. in the U.S., and then at private equity firm KKR.

To be sure, the new executive team at Moët Hennessy will be faced with multiple challenges, including a slowdown in premium liquor purchases in China and the threat of tariffs under U.S. President-elect Donald Trump.

Revenues at LVMH’s wines and spirits division slipped 7 percent in the third quarter ended Sept. 30. “Champagne was down, reflecting the ongoing normalization of post-COVID-19 demand,” LVMH noted at the time.

LVMH also named Maud Alvarez-Pereyre executive vice president of human resources at LVMH Group, and a member of LVMH’s executive committee.

She takes up responsibilities previously handled by Chantal Gaemperle, who recently exited the group after a 17-year tenure. Her title was executive vice president, human resources and synergies.

Alvarez-Pereyre has been LVMH’s chief people and transformation officer since last year, and has worked in HR at various LVMH divisions since 2004, starting out straight out of school as an HR intern at Parfums Christian Dior, going on to work at LVMH Perfumes and Cosmetics, Moët Hennessy and shirtmaker Pink.

In addition, Cécile Cabanis, who joined LVMH over the summer as deputy finance director and a member of the executive committee, is to succeed Guiony as CFO effective Feb. 1.

Finally, Guillaume Motte, president and CEO of Sephora, is to join the LVMH executive committee on Jan. 1.

Motte has a more varied background, starting his career at McKinsey & Co. and working at electronics chain Fnac, luxury retailer Al Tayer and French fashion chains Jennyfer and Celio before joining Sephora in 2018.