Sacra estimates ElevenLabs hit $90M in annual recurring revenue (ARR) as of October 2024, up dramatically from $25M ARR at the beginning of the year—representing 260% growth over just 9 months. The company is reportedly profitable.

ElevenLabs generates revenue primarily through its AI voice platform, which is used by 41% of Fortune 500 companies. Key enterprise customers include media companies (Washington Post, TIME), gaming studios (Paradox Interactive), and publishing houses (HarperCollins). The company employs a freemium model with premium tiers starting at $22 for creator accounts and custom enterprise pricing based on usage volume.

Like Runway did in AI video, ElevenLabs is moving from foundation model to application layer and building the Adobe Creative Cloud ($13B in yearly revenue) for AI-generated audio, with Sacra estimating ElevenLabs crossed $90M in annual recurring revenue in October 2024, up 260% YoY.

Aggressively colonizing long-form audio editing (Descript), video dubbing (Premiere Pro), voiceovers (Adobe Audition), the AI voice marketplace (Envato), and content consumption (Spotify), ElevenLabs has been able to close enterprise deals with big publishers like Time and HarperCollins, raise their effective revenue per API call by 20%, and increase incremental consumption.

ElevenLabs has raised over $101 million to date. The company hit a $1.1 billion valuation in January 2024 following an $80 million Series B round co-led by Andreessen Horowitz, Nat Friedman, and Daniel Gross. The company most recently closed an unannounced funding round led by Iconiq and A16Z at a $3.2B valuation.

The company's annual recurring revenue (ARR) has grown from $25 million at the end of 2023 to approximately $90 million as of October 2024. At the reported $3.2 billion valuation, this would represent a 35x multiple on current ARR.

Key investors include Andreessen Horowitz, Sequoia Capital, and Smash Capital.

ElevenLabs was founded in 2022 by Mati Staniszewski and Piotr Dabkowski, two Polish engineers who were frustrated by the poor quality of movie dubbing in their home country, where foreign films were voiced over by a single monotone narrator.

Before ElevenLabs (2022), voice developers were limited to generic text-to-speech voices like Siri (through SiriKit) and Alexa (Alexa Skills Kit)—ElevenLabs opened the floodgates with their AI model for generating audio across 1,000+ synthetic, human-sounding voices that could speak in 32 different languages.

ElevenLabs found product-market fit allowing content creators to upload a 30 second voice sample and generate an instant clone, giving access to the tool for free and charging a monthly subscription fee based on the number of minutes of audio generated (~$0.16 per minute).

The core product uses proprietary deep learning models to generate remarkably human-like speech from text, with the ability to clone voices from just one minute of sample audio. Users can input text and receive audio output that maintains natural pauses, breathing patterns, and contextual emotional expression. The technology achieves this through advanced compression (100x better than MP3) while preserving key voice features.

ElevenLabs has since expanded into three main product areas: Speech Synthesis for text-to-speech conversion, AI Dubbing Studio for automated video/audio translation across 29 languages, and a Voice Library marketplace where voice creators can monetize their voices. The platform is now used by major media companies like The Washington Post and TIME, gaming studios like Paradox Interactive, and publishing houses like HarperCollins.

ElevenLabs is a subscription SaaS company that monetizes through tiered pricing based on the volume of text-to-speech characters processed, with plans ranging from free (10,000 characters/month) to enterprise-level custom solutions. The company has achieved $90M in annual recurring revenue as of October 2024, up from $25M at the start of the year, demonstrating exceptional growth in the AI voice technology market.

The core business model centers on providing high-quality AI voice synthesis and cloning capabilities, with a focus on preserving emotional range and natural speech patterns. Their technology enables content creators, publishers, and enterprises to generate human-like voice content at scale. The company's premium plans, starting at $22/month for creators, include advanced features like professional voice cloning and higher quality audio output.

What sets ElevenLabs apart is their proprietary research and development approach, maintaining an elite team of seven researchers who focus exclusively on audio AI advancement. This specialization has allowed them to achieve superior voice quality compared to big tech competitors who treat audio as a secondary priority.

Their platform includes a voice marketplace where creators can monetize their voice profiles, creating network effects that strengthen their competitive moat.

ElevenLabs operates in a market that includes AI voice synthesis providers, traditional dubbing services, and enterprise AI platforms developing audio capabilities.

OpenAI, Meta, Google, and Microsoft have developed voice synthesis capabilities within their broader AI platforms. However, these companies treat audio as a secondary focus rather than their core offering.

OpenAI represents the most significant potential competitor due to its research capabilities and resources, though it has not yet released a dedicated voice product.

AI voice agents have strong product-market fit as a 70% cheaper replacement for humans across support calls, appointment bookings, and restaurant reservations—they’re being built on an emerging horizontal stack of tools like Cartesia (Index Ventures) for text-to-speech, Deepgram ($86M raised, Madrona Ventures) for speech-to-text, and Hamming ($750K raised, YC S24) for testing.

Companies use multiple different speech-to-text providers, mixing and matching depending on latency, cost (ElevenLabs is 5x as expensive as Cartesia per-minute), and developer experience—all of these tools are now converging on the common feature set of speech-to-text, text-to-speech, and real-time conversational AI.

Professional dubbing studios and voice talent agencies continue to serve high-end media and entertainment clients.

These services offer human-quality results but at significantly higher costs ($100+ per minute) and longer turnaround times compared to AI solutions. Some agencies are beginning to explore AI voice cloning, with SAG-AFTRA recently partnering with Replica Studios to establish guidelines for AI voice work.

ElevenLabs has tailwinds from the rapid growth in AI-enabled content creation and increasing demand for localized media, with opportunities to expand into adjacent markets like enterprise communications, healthcare, and education.

The company's core text-to-speech and voice cloning technology positions it well to capture the growing audiobook market, currently valued at $5B and expected to reach $35B by 2030.

With 41% of Fortune 500 companies already using their platform, ElevenLabs can expand from content creation into enterprise communications, including AI-powered call centers, training, and presentations. Their ability to maintain voice consistency across languages gives them a unique advantage as companies seek to globalize their communications.

ElevenLabs has demonstrated early success in healthcare applications, helping patients who have lost their voices maintain their ability to communicate.

This opens up opportunities in the $25B assistive technology market, including applications for ALS patients, stroke recovery, and aging populations. Their technology's ability to preserve emotional expression and personality in synthesized voices positions them uniquely in this space.

The company's multilingual capabilities and context-aware speech generation create opportunities in the $17B language learning market.

Their technology can power AI tutors that help students practice conversation in any language while maintaining natural intonation and cultural nuances. Early partnerships with educational technology platforms suggest strong product-market fit in this vertical.

Three critical risks facing ElevenLabs:

Regulatory and ethical backlash: ElevenLabs' voice cloning technology has already been used to create controversial deepfakes, including fake robocalls impersonating President Biden. Despite implementing safeguards, the company remains vulnerable to misuse that could trigger strict regulations or platform bans.

Voice actor ecosystem disruption: The company's push to create a voice marketplace could alienate professional voice actors and unions, similar to the SAG-AFTRA strikes against AI in film.

While ElevenLabs offers revenue sharing, their current compensation model of platform credits rather than cash payments may prove insufficient to build sustainable relationships with talent.

Quality-cost trade-off at scale: ElevenLabs' competitive advantage stems from superior voice quality achieved through intensive research and computation.

Over time, they may be forced to compromise on quality to reduce computing costs. This could erode their key differentiator against big tech competitors like OpenAI who have vastly greater resources for AI research and development.