Venice AI, the privacy-focused artificial intelligence startup founded by crypto entrepreneur Erik Voorhees, has raised $65 million in a Series A funding round.
Dragonfly led the round, with participation from North Island Ventures, Coinbase Ventures, F-Prime, Archetype, Liquid2 Ventures, Morgan Creek and others, Venice said Wednesday. This is Venice's first round of outside capital, valuing the startup's equity at $1 billion, Voorhees said in an X thread.
In return for the $65 million investment, Series A investors received an 8.98% equity stake in Venice AI, a vesting grant of 1.5 million Venice (VVV) tokens, and warrants giving them the right to purchase another 5 million VVV tokens during the next eight years, Voorhees said.
Investors must pay Venice about $66.5 million if they exercise those warrants, which would increase the total capital raised to about $131.5 million. Both the token grant and warrants are locked for one year before vesting linearly over the following three years, Voorhees said.
What is Venice AI
Launched over two years ago, Venice AI positions itself as a private and uncensored alternative to OpenAI's ChatGPT. Venice says it does not store users' prompts on its own systems and encrypts user requests before routing them through an external proxy. It also offers end-to-end encryption for certain models through its paid subscription.
Venice says it gives users access to over 200 AI models, including open-source models it hosts itself and closed-source models from OpenAI and Anthropic (accessed anonymously via its API). Users can choose models with different levels of moderation and privacy settings.
"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," the startup said. Venice reportedly has annualized run-rate revenues of over $70 million.
Venice decided to raise outside capital to scale its platform, with Voorhees saying: "We are making Venice a mass market consumer app, an open and unrestricted AI platform for at least a few hundred million people and several billion AI agents. Doing so requires capital."
The new capital will be used to build Venice's own compute infrastructure, including its first data center, reducing its reliance on leased GPUs. "This ensures capacity in the coming resource squeeze and increases gross margins, making larger VVV burns feasible," Voorhees said. Venice also plans to use the funding to expand into new markets, acquire "additive" businesses, hire employees, and grow its customer base.
Why Venice AI sold equity
Instead of selling its treasury VVV tokens to raise capital, Venice said it chose to sell equity.
"We don't want to sell the token," Voorhees said, noting that Venice remains the largest holder of (VVV), owning more than 30 million tokens out of today's over 80 million supply. He added that neither the company nor the team has sold any VVV tokens to date despite the token rising more than 700% this year.
Voorhees said Venice intentionally waited until after launching both its product and token before bringing in venture investors.
"We wanted to do the opposite of most other projects," he said. "Most pre-sell to VCs on undisclosed terms and promise to build a product or find users later."
If investors fully exercise their token warrants, roughly 6,000 VVV tokens per day would enter the market beginning about one year from now, representing around 0.2% of today's daily trading volume, according to Voorhees. If any warrants are not exercised, those tokens will remain on Venice's balance sheet, he said.
Voorhees also noted Venice's token strategy remains unchanged. The startup plans to continue using a portion of its revenue to buy back and burn VVV tokens while reducing token emissions over time.
Venice also has another token called DIEM. Users can stake VVV to receive staked VVV (sVVV), then lock a portion of their sVVV to mint DIEM. Each DIEM provides $1 worth of API credit on the Venice platform that never expires or changes value.
The Funding newsletter: Stay on top of the latest crypto VC funding and M&A deals, news, and trends with my free bi-monthly newsletter, The Funding. Sign up here!
Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.
© 2026 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.