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HeyGen, a three-year-old startup that uses artificial intelligence to generate avatars and voices for videos, is raising $60 million at a pre-investment valuation of $440 million, six times higher than the startup’s valuation four months ago, according to a person with direct knowledge of the round. Benchmark, the early-stage venture capital firm that bet early on Snap and Uber, is leading the round, which has not yet closed, the person said.

The startup’s ties to China have put it at odds with U.S. officials, who are increasingly concerned with Chinese investment in American technology. HeyGen, originally named Surreal, was founded in China during the coronavirus pandemic but is now headquartered in Los Angeles. Its early funding came from Chinese investors such as HongShan, previously known as Sequoia Capital China, and ZhenFund.

• Longtime Benchmark general partner Peter Fenton is leading the deal

• The deals values startup at about 22 times its forward revenue

• HeyGen has tried to distance itself from its Chinese investors

HongShan’s investment in HeyGen raises concerns about a Chinese entity having “influence over a U.S.-based company developing technology with significant national security implications” due to the possibility of fake texts or videos, said a recent report by the House of Representatives’ Select Committee on the Chinese Communist Party. HeyGen’s customers include Salesforce, Nvidia and Amazon, according to its website.

To mollify potential political critics, HeyGen says its customer terms and conditions forbid the use of its technology for political campaigning or lobbying purposes, the person said. And in November last year, when it raised funds in a round led by VC firm Conviction, a representative of HongShan relinquished the Chinese firm’s seat on HeyGen’s board of directors, the person said.

HeyGen is generating more than $20 million in annualized revenue, or last month’s revenue multiplied by 12, up from $3 million in July and $1 million a year ago, the person with direct knowledge of its finances said. That kind of growth stands out among generative AI startups, many of which have been struggling to make money despite raising lots of capital. And its new valuation of about 22 times its forward revenue is relatively low compared to the valuation multiples of many other generative AI startups. (See our Generative AI Database.) At the same time, the startup has relied in part on AI voice technology from another startup, New York-based ElevenLabs, according to a person with knowledge of the matter.

Longtime Benchmark general partner Peter Fenton and Victor Lazarte, the firm’s newest general partner, are leading the new funding deal, the person said. HeyGen CEO Joshua Xu and Fenton, known for his early investments in Twitter and Yelp, did not respond to a request for comment.

Xu, a former software engineer at Snap, and Wayne Liang, who briefly worked as a product designer at TikTok-parent ByteDance, founded HeyGen in late 2020. It has around 40 employees, according to LinkedIn.

HeyGen differentiates itself from rivals such as Pika Labs and Genmo by targeting business customers such as marketers and salespeople. It faces competition from other business-focused video startups such as Synthesia and Runway.