ElevenLabs has doubled its valuation to $22bn since February

Imminent AI bubble-burst? What imminent AI bubble-burst? The investors in AI company ElevenLabs – the firm behind the Eleven Music which is also working on a separate project with UMG – don’t seem worried.

The company’s valuation has doubled from $11bn in February this year to $22bn now according to its latest announcement. Said news being a $300m “employee tender offer” – where staff sell some of their vested shares – led by investors Wellington and T. Rowe Price.

The offer was backed by a lengthy roll-call of other investors too: Goldman Sachs; EQT (also a backer of Fever, Epidemic Sound and Believe); GIC (the sovereign wealth fund that is buddied up with Sony Music for catalogue deals); Andreessen Horowitz and more.

Not to disappoint you, but this isn’t really an investment in AI music. ElevenLabs has other, bigger strings to its bow: text-to-speech AI models and a platform called ElevenAgents that helps businesses use “conversational agents” for customer and employee support.

ElevenLabs says the latter is its “fastest-growing product”, handling more than 15m conversations a week and used by “five of the world’s ten largest tech companies, five of the ten largest insurers, and four of the ten largest telecoms”.

Those conversational agents look like the heart of the business going forward. ElevenLabs recently said that it is generating $600m of annual recurring revenue, but we sense $9.99-a-month Eleven Music Pro subscriptions are far from the lion’s share of that.

Pessimists will wonder if music is going to become less and less core to ElevenLabs as its other, enterprise-focused services continue to grow. Will engineering resources inevitably be prioritised for the products that are paying the bills? Especially if that rumoured bubble-burst does come…

Optimists may take another line: a surging valuation, enthusiastic investors and a growing enterprise business could provide a stable base for ElevenLabs’ music activities to evolve and innovate.

We’d like to be optimists. This, remember, is a company that’s made licensing deals with rightsholders the bedrock of its AI-music platform from day one, making it one of the good eggs of its sector.

The hope will be that ElevenLabs’ burgeoning business outside music will enable it to absorb licensing fees, pay royalties and keep up with the Sunos and Googles of the space when investing in its models.