Some thoughts on AI avatars...

“Avatar”… that word alone probably triggers a strong reaction in you, I’d imagine. And likely negative.

It surfaces bad memories: of Mark Zuckerberg’s horribly rendered 3D character sitting in a board room, of deepfakes flooding the internet.

But if we peel back that terrible (and viral) Mark demo. What we find is that at its core — what Mark, and Facebook, were trying to do. Ultimately, is make our life experiences more immersive and information more engaging.

And while Mark was showing us one type of immersive with AR/VR.

With the rise of AI, we’ve seen different types of immersion become much more interesting, more realistic, and — I’ll go out on a limb here — sometimes more meaningful.

What interests me is that there is a subtle but extremely important knot to unpick where AI can sometimes make the world faker to consumers but sometimes actually more human.

I’ve thought a lot about this point over the past few months. For VCs there is a thesis here: about finding the applications of AI that make the world more genuine.

In the past few weeks, I’ve heard countless examples and data points around how AI avatars are hitting mainstream adoption, and driving business metrics.

Some ones that stuck with me —

• A major publisher including human-like avatars to deliver personalized messages in their freemium 'thank you for signing up' emails, and retention metrics post-message going through the roof.

• A mid-sized security company automating LinkedIn posts that mimic human updates about company offerings and activities, leading to an increase in client inbound.

• A large government entity looking to replace onboarding and employee manuals with live avatar video interactions to improve engagement and knowledge retention.

• A massive insurance firm interested in partnerships with a human-like avatar company to improve empathy and customer experience.

All of these examples go way beyond Mark’s corny Metaverse or viral Twitter demos of human clones themselves —

These are real, value-driving enterprise use cases.

We’re entering a future where human-like or character AI avatar technology is so advanced and engaging — that it can genuinely reshape how content creation, customer experience, and 1-1 and 1-to-many interactions are designed.

AI Avatar & Digital Clone Market Map

Following, I categorized the most popular AI-avatar and digital human platforms and tools in case anyone is interested.

The breakdown:

• Avatar & Digital Clone Platforms: Synthesia , HeyGen, Beyond Presence, Anam, DeepReel, D-ID, Delphi

• Developer Tools: Tavus, Daily.co, Outspeed

• Character Creation Platforms: Hallway, DreamRP

• Applications: Soul Machines

Hallway

I want to mention that we’re investors in this space.

Last year, we invested in a company called Hallway, founded by Bryan Pratte.

Hallway creates AI avatars that can stream and interact with their audience.

When we thought about what the future of AI-generated content looked like, our perspective was that it would be a lot more interactive and dynamic than a faceless chatbot.

We’re already seeing this play out in the consumer space. AI characters can stream 24/7 and, frankly, are better conversationalists. The product-market-fit data is there; it’s only a matter of time until we see further expansion — last month, Ironmouse, an avatar streamer, dethroned KaiCenat and became the #1 all-time most subscribed Twitch streamer.

On the enterprise side, adoption will continue to grow. The use cases that are initially most interesting are customer service, onboarding, employee training, and content creation for marketing and branding.

It’s also worth mentioning that Bryan sent me a video last week of an avatar streaming and reading out the news, and it was 100x more engaging than scrolling through the NYTimes app :)

Outro

Benchmark’s announcement that they invested $60m in HeyGen felt like it was the first major data point in the venture world that AI avatars and digital clones aren’t just cool tech, but are driving value.

And the more I’ve seen the industry evolve and dug into use cases and the tech — I truly believe that all of these tools and platforms are here to stay.

I’m an investor at Chapter One, an early-stage venture fund that invests $500K - $1.5M checks into pre-seed and seed-stage startups.

If you have any questions on the data, or if you’re a founder building a company, please feel free to reach out on Twitter (@seidtweets) or Linkedin (https://www.linkedin.com/in/jamesin-seidel-5325b147/).