It’s not a dream anymore
“Imagine you are about to produce a feature-length movie. You are sitting in the comfort of your room and ready to start the casting. On your screen, there is an abundance of choices in actors of all ages, gender, race and nationality. You do not need to rent a studio or a camera crew: all you need is access to the synthetic media video assets. It may sound like a distant dream right now, but 15 years ago we certainly didn’t think that millions of creators we watch now on YouTube, TikTok or Instagram would become part of our daily lives.
In the next ten years, we put our wager on synthetic media to democratize media creation and creativity for all.”
These were the first sentences of Zsolt Weiszbart’s article on why We invested in Colossyan back in 2021 when we led the $1,2 million Pre-Seed round. It is not a distant dream anymore. Large enterprises like Porsche, Vodafone or Paramount are already saving 70–80% of their production costs using Colossyan for synthetic video creation. Their revenue grew 600% last year, and real enterprise adoption will just start to really kick off. This staggering growth in one of the hottest space of our day catched the attention of many Western European and US investors. We are glad to announce that Colossyan chose Lakestar to lead their $22 million Series A round roughly a year after their $5 million Seed round. Their journey going to get only more though, but it wasn’t smooth sailing to get here either.
2021 — Early pivots
Colossyan started its journey by addressing the ethical issues of this nascent industry, including the detection of deep fakes, in collaboration with world-class institutions such as the Frauenhoffer Institute and the Technical University of Denmark (DTU). They came to the realization that today’s regulations and codes of conduct are still limited, which makes it extremely difficult to build a sustainable business focusing on deep fake video detection. Shortly after this assessment the team joined the APX business accelerator program in Berlin and started the pivot which resulted in the first Colossyan Synthetic Video API that was able to generate thousands of videos at a great speed and at almost no cost. — Zsolt Weiszbart, Why Did We Invest In Colossyan
Their initial strategy was quite similar to Synthesia’s. They wanted to become a horizontal platform for video generation. As they missed the deep pockets of Synthesia who raised over $16 million by that time they developed a PLG strategy to focus on the long-tail. These early customers were very active playing around on the platform but they paid nothing or very little for it. In mid 2022 as the company rapidly burned through their cash reserve, their revenue was barely noticeable as they could only capture low LTV, low retention customers they tried to raise a $2–2,5 million Seed round, but literally every VC they talked to either passed or ghosted them. A drastic shift was needed.
2022 — Going vertical
Trying to match your well-funded competitor feature by feature while focusing on lower ACV customers is not a good idea. Colossyan not only needed to change it’s focus from the long-tail, but they needed to find a niche in the enterprise space, which they can serve better than anyone on the market. Learning from their clients and understanding that the larger and more active ones used the product for corporate L&D they decided to tune the product to their needs and go deep into this market.
By the end of summer 2022 they had initial traction from 15 enterprise clients, though with low ACVs the early signs of product market fit started to show. At the same time the company’s runway rapidly shortened, even with the growing pipeline they couldn’t survive without a quick cash infusion.
As we believed Dominik’s as the newly appointed CEO — who as a co-founder was previously the CPO — started to move company into the right direction and saw the adoption rate picking up, with APX and Oktogon Ventures we decided to provide bridge financing to the company hoping that we’ll soon be joined by new, external investors.
Dominik and the newly appointed leadership didn’t disappoint. Between September and December, they doubled their Enterprise users, and more than doubled their MRR. They started to snoop clients from Synthesia and shipped new features way faster than any of their competitors.
Seeing the momentum building up Dominik went back to the market in Q4 2022 for fresh funding. The conversation he had were very different from those of the summer, interest started to quickly show. Launchub and Emerge Education were the most aligned with the company’s vision and by early 2023 they joined the $5 million Seed round, kickstarted by the existing investor in autumn.
2023 — Overdelivering
Right after the round we did a quick interview with Dominik, asking about his plans after the round:
Regarding our next year or so, we plan to significantly — though at a controlled pace — grow our engineering and AI research team and build up a considerable customer success team, which in my opinion, is unfairly overlooked even at many scaled-up startups. We have already started to build out our operations in the UK, which is strategically important for us, and Colossyan would also plan to open a hub in the US in the near future. So we have a lot of plans for the future, and naturally we want to maintain or even expand our current 10%+ growth rate. — Dominik Kovács, CEO @ Colossyan — Colossyan raises $5M Seed round
His plans were in the edge of the rational and the optimistic given that he was a 25 years old solo founder with a team of 20 in the midst of the AI hype, months after OpenAI publicly launched ChatGPT.
Fast forward to almost exactly a year, Colossyan has almost 60 people, with 1/5 of them located in the UK, started building the team in the US and grow well over 40% MoM. Dominik and his team massively overdelivered.
How they did it? Colossyan doubled down on the customer centric approach focusing on the well-defined niche and produced a product for them which can’t matched by any vertical players.
The success we’ve achieved at Colossyan has come from listening to and quickly acting on insights we receive from leaders in corporate training, sales enablement, and customer education. Their valuable feedback has led to the unique features that distinguish our product from competitors. This includes our leading Scenario-Based Training support, enhanced Learning Management System (LMS) integration, and best-in-class auto-translation. We’ve clearly understood the message from our customers who want us to concentrate on developing tools to make content more interactive. This enables companies to create experiences that move beyond ‘flat’ video formats. — Dominik Kovács, CEO @ Colossyan — Series A Press release
2024 — Joining the big boys club
Learning from 2022, they know that the best time to raise is not when you need the money, but when you have the momentum. They clearly had it by late 2023. In contrast to the previous round, Colossyan very quickly found the right partner in Lakestar, who rapidly decided to lead their $22 million Series A round, with participation from existing investors Launchub, Day One Capital, Emerge Education and Oktogon Ventures.
While seeing success in other verticals Colossyan will remain focused on corporate L&D covering use cases from onboarding new employees more efficiently to enable sales team to achieve higher product adoption rates. Their roadmap includes new features to boost engagement and learning outcomes, including video branching, knowledge checks, and more advanced control over AI avatars.