Month-old Deepmind spinout nears $4bn on ‘future capability’ bet
A British AI startup founded just last month by three former Google Deepmind researchers is nearing a $4bn (£2.9bn) valuation – despite having no product or website.
Emulate is in advanced talks to raise as much as $700m in a seed funding round led by Index Ventures and Lightspeed Venture Partners in a deal that would value the company at $3.7bn including the new capital. The terms have not yet been finalised and could change.
The valuation puts a multibillion-dollar price tag on a company incorporated as recently as August and still operating in stealth, as investors pile money into teams spun out of the world’s leading AI labs before they have launched commercial products.
Charlie Dai, vice president and principal analyst at Forrester, told City AM the deal reflected investors betting on “future capability creation, not present revenue or commercial traction”.
“Investors are increasingly underwriting elite AI research teams before product-market fit, especially in frontier domains where a breakthrough could create entirely new markets”, Dai said.
Emulate was founded by Jack Parker-Holder, Matthew McGill and Philip Ball, who previously worked on Deepmind’s Genie technology.
Parker-Holder led the development of Genie 2, while all three contributed to Genie 3, Deepmind’s world model capable of generating interactive environments from text prompts.
Their new company is working on so-called world models, AI systems designed to simulate and predict how physical environments behave.
Unlike the large language models underpinning products such as ChatGPT and Gemini, which predict and generate language, world models aim to understand how actions affect an environment.
That could allow a robotics company to test thousands of movements in simulated warehouses before putting a robot to work in the real world. Deepmind has itself pointed to robotics and autonomous systems as potential uses for the technology.
“Venture investors increasingly back teams with demonstrated experience building state-of-the-art foundation models, particularly in emerging areas such as simulation, reasoning and world understanding, which are crucial for physical AI and robotics”, Dai said.
“The funding reflects confidence in the team’s ability to create category-defining technology rather than any specific product currently in market”.
Deepmind’s founder factory
Emulate is the latest in a string of heavily funded AI startups to emerge from Deepmind, turning the London-based lab into a lucrative hunting ground for venture capitalists.
The prospective round follows major fundraises by other British AI labs founded by former Deepmind researchers this year, as investors compete to back experienced teams at increasingly early stages.
It also comes as world models emerge as another battleground for AI investment.
Fei-Fei Li’s World Labs has raised more than $1bn to develop spatial intelligence technology, while a growing group of companies are targeting simulations and robotics rather than competing directly with the large language models developed by OpenAI, Anthropic and Google.
Dai said the money available to former researchers meant some departures from established labs were inevitable.
“As investors are willing to fund proven research leaders with hundreds of millions of dollars before product launch, some top talent will inevitably pursue independent ventures,” he said.
“This reflects intense market demand for elite AI expertise rather than a decline in Deepmind’s technical leadership.”
Emulate’s prospective valuation nevertheless leaves its founders with plenty to prove.
The startup, whose funding round was first reported by the Financial Times, has yet to unveil its technology publicly or disclose a commercial product. None of its three founders has previously run a company.
Emulate could not be reached for comment.