Everyone has a story to tell, and a startup called Inkitt is leveraging AI to transform captivating narratives into hits, with visions to create a contemporary "Disney" around this content. Recently, Inkitt secured $37 million to fuel this ambitious endeavor.
The Inkitt app allows users to self-publish their stories. Utilizing AI and data science, it identifies the most promising submissions, refines them, and distributes them through its sister app, Galatea.
So far, Inkitt claims to have attracted 33 million users and produced numerous bestsellers. This latest funding round, a Series C, will enable the company to diversify its offerings. Upcoming projects include leveraging AI to develop stories from original concepts, personalizing fiction for individual readers, branching into games and audiobooks, and creating video content adapted from user-generated stories—initially produced by humans, but with plans to incorporate AI-generated content in the future.
As CEO and founder Ali Albazaz explains, the long-term goal is to broaden the content library and establish a multimedia empire. He envisions Inkitt as not merely a rival to platforms like Wattpad, but as a groundbreaking storytelling giant of the digital age.
Vinod Khosla from Khosla Ventures leads the $37 million Series C, with participation from previous investors NEA, Kleiner Perkins, Redalpine, and several undisclosed backers. This recent investment brings Inkitt’s total funding to $117 million, which includes earlier rounds of $3.9 million in seed funding, $16 million in Series A, and $59 million in Series B. The company has reportedly attracted acquisition interest from at least one publisher and is already exploring an additional funding round.
Currently, Inkitt's Series C values the company at approximately $400 million post-money—a modest increase from the $390 million valuation during its Series B, reflective of the broader investment environment and the challenges facing consumer-focused startups.
Inkitt’s strategy represents a notable shift within the publishing landscape. As mobile devices occupy more of consumers' time and reading rates decline—averaging only 15 minutes per day for American adults in 2022—Inkitt seeks to combat this trend by innovatively providing engaging literary content. Their approach includes creating shorter, more mobile-friendly chapters and incorporating interactive elements like sound effects to enhance the reading experience.
Inkitt also tailors its offerings to reader preferences. The company conducts A/B tests on aspects such as titles, story arcs, opening lines, and cliffhangers. This extensive data collection enables Inkitt to refine their processes, adapting quickly to trends and improving future publications.
Their approach is yielding impressive results. While many services that thrived during the COVID-19 pandemic have seen declines, platforms like Inkitt, Galatea, and their new addition, Galatea TV, have experienced increased user engagement. “People have so much going on now,” Albazaz noted about post-pandemic life. “They seek an escape, which is likely why we are flourishing.”
According to Albazaz, Inkitt ranks as the No. 11 bestselling publisher globally, surpassing major names like Penguin Random House. Their algorithms reportedly achieve a 20x higher success rate in publishing bestselling books compared to traditional methods.
Revenues have doubled over the past year, although exact figures remain undisclosed. New ventures like Galatea TV are not only enhancing the reading experience but also yielding significant returns; a series based on the book "Beautiful Mistake" has generated $500,000 in revenue alone. Albazaz mentioned that the company is "almost profitable" and claims that its royalty rates are higher than those typically offered by more traditional publishers for less-established authors.
Founded in Berlin but now headquartered in San Francisco, Inkitt primarily focuses on fiction—though it intentionally steers clear of literary heavyweights. After a notable author's negative experience with suggested edits, Albazaz emphasized that Inkitt prefers to concentrate on nurturing undiscovered talent rather than navigating the complexities of established names.
It remains to be seen how willing this pool of emerging writers will be to embrace algorithm-driven storytelling. Albazaz expressed enthusiasm for incorporating AI-generated narratives based on compelling human-created concepts, highlighting a commitment to personalizing stories through sophisticated algorithms.
Currently, personalized storytelling is in developmental stages, with Inkitt experimenting with various degrees of customization and even considering user-driven content modification.
To realize this vision, Inkitt is exploring several language models, including APIs from OpenAI, Anthropic, and Mistral AI—the latter being favored for short passages. Each book is published in 10 languages, utilizing DeepL for translation, while ElevenLabs aids in generating audiobooks, and Leonardo is pressed into service for cover art.
Albazaz noted the variability in the quality generated by these LLMs: “They typically produce subpar content. Standalone LLMs lack the ability to create bestselling stories, which is where we leverage the comprehensive data we've accumulated."
For Inkitt, protecting intellectual property is critical, so they avoid reliance on a single LLM for entire novels. Despite potential constraints, Inkitt has identified numerous avenues for growth. Its focus on creating an AI-driven content ecosystem aligns with Vinod Khosla’s vision of personalized entertainment, making Inkitt's mission highly relevant in today's market.
Vinod Khosla, while declining an interview, stated, "With the rise of AI, entertainment has the potential to become both abundant and personalized. Inkitt exemplifies this through its commitment to creating meaningful, customized storytelling."
Ranking
