If you would like to learn the way concerned VCs (and Silicon Valley in general) are about legal challenges to AI training on copyrighted material, look no further than the AI music site sunny.
Suno, which allows anyone to create AI-generated songs using prompts, announced on Wednesday that it raised a $250 million Series C round at a post-money valuation of $2.45 billion. The round was led by Menlo Ventures with participation from NVentures, an arm of Nvidia, in addition to Hallwood Media, Lightspeed and Matrix.
The company offers monthly consumer subscriptions (free tier plus $8 or $24 per 30 days plans), and in September launched a version of Suno for business creators. Suno said it has now reached $200 million in annual revenue Wall Street Journal.
Previously he raised approx $125 million Series B in May 2024led by Lightspeed Venture Partners, Nat Friedman and Daniel Gross, Matrix and Founder Collective, and is valued at $500 million.
But Suno was also the poster child for AI training lawsuits brought by human artists. The company is struggling suit of three major record labels — Sony Music Entertainment, Universal Music Group and Warner Music Group — which accuses Suno of coaching in copyrighted material scraped from the Internet without permission.
These kinds of matters are still in a legal gray area in the US and most of them are often settled through a training data license agreement. (Universal and Udio settled their lawsuits this manner last month.) Suno has also faced similar legal challenges from Danish music rights organization Koda and Germany’s GEMA. Incidentally, earlier this month GEMA won a lawsuit filed in Germany against OpenAI, which also questioned the legality of coaching on scraped copyrighted materials.
However, given Suno’s market success, its growth and the obvious potential market for AI-generated music, Suno’s legal complications have left investors shrugging.
“Enter an idea, click Create, and suddenly you’re not just imagining music – you’re creating it. That transition from listener to creator? That’s what unlocks Suno,” describe Menlo VCs who supported the startup, in their blog post about investment.
Menlo liked not only the technology, but also that Suno has grown largely through word of mouth — people sharing songs in their group text messages, investors say.
There is little doubt that the AI industry is and will proceed to work on the legal ramifications of acting first and then asking for permission on training data. But before that is decided, the era of AI-generated music has clearly arrived.