AI video startup Hedra lands $32M led by Andreessen Horowitz to help brands create lifelike digital avatars

Hedra, an AI video startup making it easier for anyone to generate lifelike digital characters, has raised $32 million in Series A funding led by Andreessen Horowitz’s infrastructure fund. Existing investors including a16z Speedrun, Abstract, and Index Ventures, joined the round. Matt Bornstein from a16z is also joining the board.

The latest round brings Hedra’s total raised to $43 million and values the company at around $200 million, according to someone familiar with the deal.

The company, which quietly launched in 2023, is behind some of the more unexpected uses of AI video tech lately, like the viral trend of AI-generated talking baby podcasts. One video features an AI dog complaining about life with a newborn. It’s odd, but people are into it.

Hedra’s Character-3 model is what’s powering many of these clips. The model blends text, image, and audio to generate expressive digital characters, giving users a web-based studio to create, edit, and style videos. It even lets people transfer visual or voice styles between clips. And while this trend might be more playful, the tech is also being used by marketers to create branded avatars and virtual spokespersons.

Hedra’s origin is both personal and practical for founder and CEO Michael Lingelbach. Before pursuing a PhD at Stanford, he spent years performing on stage as a theater actor—a background that shaped his belief that characters are the heart of every story.

That conviction, combined with a gap he noticed in the market, led to Hedra. Tools like Synthesia could generate avatars, and Runway could produce video clips, but nothing truly connected the two, especially not for longer-form dialogue with believable, expressive digital characters. We covered Synthesia last month after Adobe invested in the startup, a move that highlights the growing demand for AI-generated videos in the corporate world.

“We’re building the next generation of storytelling technology to empower content creators and enterprise marketers to tell narratives at scale on their own. Getting over the uncanny valley of compelling performance is the hardest frontier in video, and with our Character-3 foundation model, we’re devoted to crossing it,” Lingelbach said.

The company released its first video model in June 2024 and quickly secured $10 million in seed funding from Index Ventures, Abstract Ventures, and a16z Speedrun. Earlier this year, Amazon’s Alexa Fund joined in.

Things picked up even more after the launch of its Character-3 model in March. Lingelbach said it marked a turning point for user growth and kicked off a wave of investor interest. The company now plans to use the fresh funding to train its next model, with better customization and the ability for characters to respond to users—moving closer to interactive AI personalities.

Right now, Hedra is focused on attracting creators and prosumers. But it’s also drawing interest from marketing teams at larger companies. The product is built for flexibility: while Hedra handles character movement and animation, it integrates with other models for video (like Veo 2 and Kling), images (Flux, Imagen3, Sana, Ideogram V2), and voice (ElevenLabs, Cartesia).

The AI video space is crowded. Competitors include Captions (which also has backing from a16z and focuses on smartphone users), Cheehoo (working with Hollywood studios), Synthesia, and HeyGen. But Hedra argues its characters are simply more expressive and believable than what others are offering.

“AI companies can produce amazing clips of environments and simple actions. But they can’t generate meaningful dialogue or animation,” Bornstein said in an emailed statement. “It’s not just about making a video, it’s about making a story that resonates. This is largely down to the people and characters in the story. That’s exactly what Hedra is building.”

Hedra is still small—just 20 people today—but plans to triple its headcount as it builds out its platform. And if talking babies is just the beginning, things are about to get weirder.

Hedra team (credits: Hedra)