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Investment Notes: Velveteen
We're thrilled to announce our investment in Velveteen - a startup that leverages Generative AI to not only bring deceased animal companions back to life, but also turn them into personal assistants.
There is a reason why dogs are known as man’s best friend - their unwavering loyalty, unconditional love, and steadfast companionship have endeared them to humans throughout history.
The loss of a pet can be devastating - it is normal to mourn the death of an animal companion as you would the passing of a family member.
But what if pets didn’t have to die?
Enter Velveteen, co-founded by Claude Bard and Geoff-Patrick Texter - a startup that leverages Generative AI to not only bring deceased animal companions back to life, but also turn them into personal assistants.
What we loved about the opportunity
The perfect pet for every pawrent
Everyone wants to be reunited with their childhood pet - to see Buddy the Labrador bounding down the hallway again: tail wagging, eyes sparkling with mischief and unconditional positive regard.
Using state-of-the-art machine learning techniques, Velveteen can recreate your childhood pets. Customers upload pictures and videos of their pet, and supplement it with a survey about their pet’s best qualities, temperament, likes and dislikes, special quirks, and daily routine.
What’s more, Velveteen’s premium service will allow you to make edits or enhancements. Want a Golden Retriever that’s hypoallergenic? Done! A chihuahua with the temperament of a Bernese Mountain Dog? Simple - for a small extra fee.
After a few design iterations with the owner's feedback, the final companion animal is selected.
Founders who live and breathe generative AI
The last six months has seen waves of tourists and mercenaries found ‘Generative AI’ startups. Claude and Geoff have been working in the space for over a decade - Claude was a Research Engineer at Google Brain and Geoff was an early employee at OpenAI.
Their passion for using AI for good led them to start Velveteen - leveraging machine learning to tackle humanity’s deepest sorrows - the loss of our beloved animal companions.
Claude and Geoff were introduced the Lyka team - who are collaborating with Velveteen to develop the perfect bundle of food, treats, and supplements to put a bounce in the step of every reincarnated floofer.
The challenges we saw
Velveteen can recreate the personalities and mannerisms of pets with a high degree of accuracy, but the AI will not result in a perfect reincarnation. There will inevitably
be glimpses of strangeness that betray the robotic nature of these AI companions. This could bring users distress and undermine the authenticity of the experience; some owners may even feel that an imperfect recreation does more to highlight the loss of their pet than assuage it.
As the technology progresses, the "uncanny valley" effect may actually become more pronounced before it improves. This could turn some initial enthusiasts into critics and dampen excitement around Velveteen's offerings.
The founders understand the need to invest in improving the quality of their AI in step with user sentiment to avoid a backlash. At the same time, they must pace their progress to align with the speed at which societal views on these technologies are shifting - pushing the envelope too quickly on recreating life could stir up moral panic, as we saw in recent days when a group of influential tech executives petitioned for a moratorium on Giant AI experiments.
Prohibitive upfront costs and unproven unit economics
The experience of reuniting with a beloved pet is priceless to users, but the technical capabilities required to recreate a pet's personality and animate them as an AI companion do not come cheap.
Velveteen has to invest heavily in machine learning engineering, 3D design, and cloud computing resources to build each AI pet. Their upfront costs far outstrips what most owners are willing or able to pay to reincarnate their beloved pet.
To achieve profitable unit economics, Velveteen needs to find ways to monetise these AI companions in other ways, from other payers. Most promising is the potential to tap into the personal assistant capabilities of these pets. Velveteen is designing the AI to have a deep understanding of their owner's preferences, habits and needs which could make the pets perfectly suited as custom digital assistants.
Velveteen’s proposition will be pets whose love language evolves from tail-wagging and face-licking to completing life admin tasks for you while you sleep. Your pet rabbit can order groceries when it notices your carrots aren’t fresh; your cat can book getaways when it senses your agitation. Peak convenience - for the small cost of commercialising your inner life!
If users come to rely on their AI pets for everyday tasks and advice, Velveteen can charge third-parties seeking access to users' data and attention. Velveteen could take a revenue share on all transactions and subscriptions facilitated by the AI.
How we built conviction
Velveteen is named after Claude’s favourite children’s book - the Velveteen Rabbit - a tale about how a stuffed rabbit tries to become real through the love of its owner.
Claude has always been moved by the transcendent power of love, and the lengths pet parents will go to be reunited with their beloved.
When our Investment Committee met with Velveteen’s co-founders, they bought along
six AI animal companions they had designed - two playful Golden Retrievers, a curious beagle, a regal looking Siamese cat and two mischievous looking parakeets.
The level of polish and personality in these designs surpassed what we could have expected. We spent that afternoon playing, laughing, and rediscovering with these delightful AI pets. For a few hours, we threw financial prudence and logic aside and basked in the simple joy of their digital companionship.
While we wait for Velveteen’s economics to crystallize and technology to mature, we will be content enjoying our new AI friends. Even if this venture should fail, it will have succeeded in bringing us amusement and escapism when sorely needed. After all, what is life without whimsy?
Perhaps it goes without saying, and astute readers may have already guessed - we are proud to share that we are investing not money, but foolish abandon in Velveteen.
Wishing you an April 1st filled with fanciful delight and frivolous cheer! Let us know in comments when you figured out the prank (or if you didn’t until the end).
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