Legally beleaguered AI music startup Suno raises valuation at $2.45 billion on revenue of $200 million

If you want insight into how venture capital firms (and Silicon Valley in general) are concerned about the legal challenges of training AI on copyrighted material, look no further than AI music site Suno.

Suno, which lets anyone create AI-generated songs through prompts, announced Wednesday that it has raised a $250 million Series C round at a post-money valuation of $2.45 billion. The round was led by Menlo Ventures, with participation from Nvidia’s investment arm, NVitures, as well as Hallwood Media, Lightspeed, and Matrix.

The company offers monthly subscriptions to consumers (a free tier plus $8 or $24 per month plans) and launched a version of Suno for commercial creators in September. Its annual revenue now reaches $200 million, Sono told the Wall Street Journal.

It previously raised a $125 million Series B in May 2024, led by Lightspeed Venture Partners, Nat Friedman and Daniel Gross, Matrix, and Founder Collective, at an estimated valuation of $500 million.

But Sono has also been the poster child for AI-training lawsuits brought by human artists. The company is facing a lawsuit filed by three major record labels, Sony Music Entertainment, Universal Music Group and Warner Music Group, which allege that Suno rehearsed copyrighted material that had been removed from the Internet without permission.

These types of lawsuits still exist in a legal gray area in the United States, and most are settled, usually through a training data license agreement. (Last month, Universal and Udio settled their lawsuits this way.) Suno has also faced similar legal challenges from Danish music rights organization Koda and Germany’s GEMA. Incidentally, GEMA earlier this month won the lawsuit filed in Germany against OpenAI which also challenged the legality of training on stolen copyrighted material.

But given Suno’s market success and growth and the obvious potential market for AI-generated music, its legal complexities are a sell-out for investors.

“Write down an idea, click create, and suddenly, you’re not just imagining music, you’re making it. This shift from listener to creator? That’s what Suno unlocks,” the Menlo VCs who backed the startup describe in their blog post about the investment.

Investors said not only did Menlo love the technology, but also that Suno had grown largely through word of mouth — people sharing songs in their group texts.

To be sure, the AI ​​industry is eventually, and will continue to, determine the legal consequences of first acting, and later seeking permission, on training data. But before that settles, it’s clear that the age of AI-generated music has arrived.