Synthesia CEO on turning down a $3bn acquisition offer and instead raising at a $4bn valuation

0:00Hello and welcome back to the Scaling Europe show presented by Deal. I'm Seb Johnson and today I'm joined by none other than Victor Ruppepelli of Synthesia that has just announced a$200 million Series E at a whopping$4 billion valuation. Congratulations. Thank you. Must have been a quiet end to the year for you. No? Pretty intense. So the round has been led by Google Ventures, an existing investor in the company. What gave them the conviction to double down even more? I think when you look at the business, right, I think one of the things that definitely stands out is the quality of revenue that I think we're driving.

0:37There's lots of AI companies that are growing very fast, lots of top-line revenue, which is awesome, right? But I think if you really go in and you kind of examine how much of an experimental revenue and how much of it is real revenue and how much of it is really high-quality revenue, I think in that last category, I think we spike out quite a lot. We spent a long time building what I think is a very, very good enterprise business, plus 140 % NR. Amazing. We work with almost all of the Fortune 100. And I think those are the things that really stands out. And of course, the input to that is the fact that I think we build a product that very genuinely, truly delivers a lot of value to people, not just cool demos and what-ifs and big dreams.

1:21And I think we have those as well. That's an important part, I think, of partnering with customers today. But I think the core product is just delivering a ton of value. And I think that's very obvious in the metrics. And do you think, looking back, that the winners of this kind of era are going to be AI companies like yourselves, who still have those SaaS metrics? It's a good question, right? There's clearly a new shape of company that emerges with every new wave of technology. and I don't think we're at the point yet where we really know what a truly, truly AI native company looks like. Some people think it's going to be defined by just being five people building a billion-dollar company.

1:58Other people think it's going to be defined by other things. I don't think we know that yet. I think we're probably one of those companies. We were kind of started in the SaaS era. We took off in the SaaS era. And so there's a lot of ways of how the product and companies build, which is, I guess you could say, kind of come from that time. I think we're innovating a lot. But I think right now, I think SaaS metrics are still important, right? I think especially things like quality of revenue, maybe NRR will be... I actually think NRR will be the right metric even in five or ten years. Yeah. Yeah, yeah.

2:31I mean, it's the metric that's becoming increasingly important. As you mentioned, there's so many high-growth AI companies that are not sticky by their nature. I also want to touch on one of your new investors, Avantik. So Avantik, the new fund, Matt Miller, ex-sequoia partner. He's one of the new investors that is coming on. What is Avantik bringing to the table that I guess Synthesia didn't have before? Yeah. So I think Matt has done an excellent job of really bringing together the European startup community in a way that we just hadn't really before. And for me, I think it's all about the people.

3:06And I think what Matt has done really well is actually to create a forum. So it's, you know, even before Evantic invested, you know, me and Stefan were both part of the community, which he calls the Legends community, which really is a community that's very active of, like, the best people in Europe across founders, operators, investors, and so on and so forth. I really admire, like, how quickly he's actually managed to build that. And that's big leverage on the business. So I think outside of access to those people, of course, a lot of them we know. I think with Evantic, we're kind of solidifying that.

3:36the way he operates the fund, right, is that he actually gives out carry to legends that help other founders in the portfolio, which I think is a very interesting twist on the traditional venture model that incentivizes more collaboration than the usual LP base of an investor, right, who've invested in the fund. They'll help when they can, but it's not like, it's not really the same model. So I think that's something I admire a lot. And I think Matt's, you know, looking at him as an entrepreneur, having known him now for like a couple of years, I think he's just very impressive and was super happy to have him on board.

4:07Yeah, a super interesting model. I've heard that because he has this big community of legends, that he just mobilized this group of people to fight on his and Avantix case to try and get into a round, which is just like, yeah, it's a really interesting take on that. And I think if you look at the track record so far, the companies he's gotten into, very impressive for a fund that's like barely a year old. Yeah, it's all the big names of the last six, nine months, all the big rounds he's managed to get into. And even for us, like, you know, we know everyone in the community already, but I think we received 40 messages at least from like you know tier one people just saying hey like take that's what I had about another another company as well that it's like you just get bombarded by all these amazing people in Europe being like take his money exactly I don't think I've had 10 % of that like I have of course received messages from people I admire like hey you work with this fund but like this scale that that is he's immobilizing is is impressive I think that talks a lot to the power of the community absolutely and one of the things that was also So part of this round is a secondary sale, which we love to see.

5:06I know this is not the first one that Synthesia has done. Can you talk about how much liquidity that you kind of enabled? We're not public about that, but it's a pretty significant number. And I think it's something that just makes me and Steph and the rest of the founders like incredibly proud. Yeah, yeah. One thing you really need in the ecosystem is liquidity to employees. You want that money to go back into the system. It makes it more attractive to working startups because all of a sudden people, you know i always used to say in in europe nobody knows anyone who made any money of working in a startup in europe i'm sorry in the u.s everybody knows someone who made a million dollars by being early somewhere and we need more of those stories to both inspire the next generation of entrepreneurs we need those stories to inspire people to want to work in startup land we need this to you know help bring more angel investors to the table so um i'm really proud that we're able to do that and i think it's super cool that not just us but you know 11 labs and many of other big companies it's becoming like a common thing to do this as well.

6:04And part of this round, have you seen or have you made any of the employees cash millionaires?

6:15Yeah, I guess we have. I love it. That's amazing. I think if you look at how many years we've been operating, we've made a lot of millionaires. Oh, for sure. And it's amazing to see that realized in cash because you're right. I mean, those people go on to become angel investors and they reinvest it and it gives them financial security to start their own one day um what's the atmosphere been like in cindy i know that you told the company before christmas what's it been like since then what was the reaction like i mean i think the reaction is is great you know as it happens with these things like things kind of leaked a little bit beforehand so it wasn't like a total surprise when people found out but these are big milestones for our company i think it's big milestones uh but the company of course it um it signals you know investor confidence and it validates that we're doing a good job it has the secondary component to it as well, which on an individual level is something people celebrate and are very happy about.

7:05So I think it's a great end to the year, but of course it's like, you know, there's no time to rest on the laws. I think everybody in Zynthesia knows that we're killing it, but you know, there's lots of competition. It's a market that's going incredibly fast and, you know, the game is, the battle is not won yet. Yeah, of course. Anything that you can share about current revenue ARR anything like that not public around that but we shared last year when we we crossed 100 we're obviously gonna you know blow past 200 this year and I think you know if you look at the raise and the valuation I think it's it speaks to the obviously you know really really good growth rate so very happy about and now you're you've kind of hit series e this is technically I guess late stage how are you thinking about balancing growth and profitability are you thinking about profitability at all or are you still thinking you know we've got this sort of war chest we're just going to double down on growth much more doubling down on growth um i think you know we're one of the ai companies that actually have like really good margins and really good unit economics which is a great position to be in um i think if we didn't have that i would probably begin to think more about that at this stage of the company but because we have that i think we're very confident just like doubling down on the on on growth right as you're confident that when the time's right you know you'll be able to flip on that profitability switch and start generating cash?

8:24We can decide to invest more or less in growth, but we have a very solid business that underpins it. If the business is at 10 % margins, because every single dollar we make, 90 % of it goes to model layer providers. I would probably start thinking more about how do I make that number better? Because that's going to be very hard to... That's more like a fundamental thing in the business, right? But right now, we're definitely just all in on growth. And growth was huge in 2025, right? It seemed like a real takeoff year for syndesia yeah what would you say was one of the key drivers that kind of unlocked that growth for you so i i think we have this we have this journal mantra called utility over novelty which is um something we've been talking about for many years but at its core is really just about you know we're building technology that's very cool has a high wow factor and all things is great it helps you know gather interest it helps people you know help with marketing helps a lot of things, which is awesome.

9:16But it's very important not to lose sight of just building cool things, but that doesn't actually drive value. So for the last four or five years, we've been very focused on not getting lost in cool demos, but actually building a lot of value for our customers. And of course, the AI models is a very important part of that. But I think when you look at why we've succeeded so much and why we've really won the enterprise, a lot of it is actually the non-AI things we've built. We've built across the value chain. We have the AI models, which is kind of where it starts. We generate pixels and videos.

9:44we build an editor a video editor right where you can do the non-ai things you want to add in like a screen recording put some text do some animations we build a content management system a collaboration platform a translation product and a video player where people can publish their videos with interactive elements like buttons and all these things together creates a workflow and it's that workflow that people buy and it's that workflow that's better than anyone else right and when I say workflow what I mean is like you have an idea you want to make a video that process when you have an idea for a video until it's delivered to an end consumer, we've really optimized that process.

10:18Whereas a lot of other companies maybe have focused a lot on just the AI models, just the editing part of it. I'm not saying that's wrong, but I think for the kind of customers we have, the kind of use cases we have, the speed of getting through that workflow is really important. And that's not just AI models. That's also building enterprise readiness, SSO, admin logs, all these things that enables to be rolled out across the enterprise. So I think that's one of the things you've done, right? Yes, the classic sad stuff, right? As in, yeah, there's a question I wanted to ask also about, you know, one of the things that you've spoken about is the cost of content creation coming down to zero.

10:52And we're seeing the rise of AI make it more and more accessible. Because it's sort of like linked to that process that you're talking about. As we see the cost come down, as we see accessibility kind of open up and broaden, what do you think is the key human skill that's going to become increasingly important for making great content? Yeah, today, right? I think there's still some gap in getting to the final quality of video that you imagine. But I think once we're past that, which I think will be pretty soon, where basically you will have a video editor that you can chat to and can probably bring whatever idea you have to life.

11:28I think it's going to be a lot about the taste, which is a very diffuse thing. I still think people who are great at video will have much better taste than people who are not good at video today. but it will be about like how long should this video be how do i make it funny if it's maybe it's a serious topic but you want it to land really well so you make it a little bit more funny right like all those things which i think today makes for great you know video creators will still be relevant the production process will be a lot easier yeah but i you know i tend to always think of course ai already today and in the future will mean that it'll be way more content on internet because everyone can create but there's already a lot of content on youtube there's already a lot of content on TikTok, right?

12:09Like a lot of people that make video, but it is only 1 % of those videos that get any views. And that is mostly because those people understand how to tell a story in a compelling way, how to stand out from the rest and so on. Yeah, got it. Okay. The last time we spoke, you said, and I quote, Synthesia is ripping. How are you going to ensure that you continue to rip in 2026? So we have the core product, which is ripping, which is great. The big thing for us now is launching our next product, which we're calling Skills. And it's kind of our first foray into truly AI-native video. So up until today, what we've been doing is video as you know it, but made with AI.

12:51So it's still a static video you play from A to B. And this new product, right, is essentially video you can talk to. That can mean a lot of different things. The first product we're launching is around skills and training, specifically for sales teams. And so what this means is that you go from, you know, we work with companies like Zoom, for example, on training their sales team, keeping them enabled. Like there's so much that happens in the world as a software seller, like your competitors launch new products, you change your own pricing policy, and you get a new CRO in who has a different methodology for how you go to market.

13:21Like this stuff happens in a business all the time, right? And so it's very important to keep everyone in the company and specifically your sales team up to date. Those are problems that existed for a long time. And a lot of our customers today, we help with that. just through making short, bite-sized video content. Now what we're able to do is saying, instead of just making sure you've watched a video, we can actually make sure if you've understood the content or not. So you watch a 5-10 minute video, and then you can add in an agent at the end of that video that can, for example, pretend to be a customer.

13:51Then you role play, and as a salesperson, you have to then overcome objections, explain why your product is better than the competitor's product. And the agent is, of course, intelligent using LLM, so they can figure out like where you're weak and they can ask more questions there. And they can actually then also give you after feedback on what are you good at, what are you less good at, which of course is very helpful for you and you can practice as much as you want. But it also begins to create a data set for the CRO and the managers of like, how well do people actually understand our product?

14:21Which is data that doesn't really exist today. It exists in the minds of sales managers who will know their own team. But this begins to give you like an actual dashboard saying, okay our team is really strong on the core product and why that's good but our team is not very strong on why you know synthesia is better than competitor x or not very good at like opening lines like whatever it is you go in and you define with this product and that could be anything you want in your business so that's an entirely new data set and it's entirely value proposition to some extent right and so the way we're going to continue ripping and get to a billion dollars of AR is by expanding the product suite and this is really about going from purely selling communication to actually selling what kind of outcomes in a sense like someone watching a video is is of course like it's an outcome but i can't prove you've changed your behavior because you've watched the video right but with this we actually can begin to show behavior improvements and that's a very different value proposition right yeah yeah and it's very back and forth right it's It's very back and forth.

15:26Checking the dynamic. Exactly, right. And these agents, you know, you can... This is one example of how you can use them. That's the first thing we're launching. It could also be that you can just ask the agent a question if you're in doubt about the content. That's also very valuable in many instances. In the future, I think, you know, we'll be doing things like recruiting where, you know, you can have kind of a video agent that can interview a candidate on the spot, give them a case study, alongside with explaining them what the job is and the roles is. there's going to be a lot of use cases where you can combine like you know static video as we know today with these agents that can hold a conversation with someone for information intake giving them a life you know case study doing role plays with them like there's so many there's so many use cases you can you can use this and where we want to play is just for the experiences agent experience that require like a visual component that's where Synthesia can come in and play.

16:20And when you're looking at things like, you know, building the skills for sales or going into recruitment, how are you deciding what to build? A lot of it comes from our customer base. You know, I think historically, Cynthia has always been around enterprise knowledge, information sharing, not like storytelling and content as much. And so when I look at our customer base and when I talk to our customers, it's very clear that, you know, when I ask them, what are you trying to do with the videos you're creating, right? That's like, Well, we're trying to ensure that our sales team is enabled to sell our new product and whatever.

16:53And that's great. We're helping them with that today. This is just a natural extension of that, really, right? So it's about listening to the customers and helping them solve the actual problem that they're trying to solve. Like today, we can take a part of that problem. But if we can solve the entire problem for them, that's very valuable. And that's what they want as well. And, you know, you've been invited to$4 billion now. You mentioned the Ambitioning Sketch for Billion Dollar ARR. how big do you think Synthesia can get? I think there's a 100-billion dollar outcome that's definitely possible.

17:20It requires, of course, a lot of great execution. But I think there's no doubt the world is moving into visual-first communication. We're seeing that everywhere. Video is taking over almost everything that we do. And we're moving into a world where agents is going to be probably the primary way we interact with most types of products and software, right? And the combination of those two things, we can play a really, really big role in. If you want to create an agent experience that is visual first, and by this, I don't just mean avatars that you talk to, that will be a component of it. This is about much more than that, right?

17:59It's about showing you relevant images. It's about drawing a graph of whatever you're talking about or tables, something like that. And that's a space where I think we can play a really big role. So I think the potential outcome from here, I think, is really, really big. It's still massive. And I also wanted to touch on the acquisition rumors at the end of last year. So there's rumors that Adobe wanted to purchase Synthesia for$3 billion. Meta was even interested. Why did you say no? Well, I can't discuss rumors, unfortunately. But, you know, we just raised the new funding round. So we're very excited about that path.

18:30And the ambition is just to go your own and to build a$100 billion company. I mean, we think the opportunity is massive, right? and we're very excited about that path forward. Interesting. One of the things I've always really admired about you is your stance on Europe. So you are very optimistic, you're bullish on Europe. You want to see Europe and European tech succeed, but you're also very critical in a constructive way. You've mentioned that you do really want to see European tech succeed. It's one of the reasons why you're HQ'd here in London is you want to prove that it can be done almost.

19:00Do you ever feel any tension between wanting what's best for Europe, which is having great companies scale and grow headquartered here versus what's best for Synthesia, which may be moving headquarters to America one day or being based somewhere else. Yeah, I mean, look, I think I care deeply about the European mission and I want to succeed here, but it's not at all cost, right? So that's something we always evaluate. I truly think, you know, from where we are right now, as I've said many times, I think there's a lot of pros of being in Europe. I don't think it's spoken about enough, especially being, which I would humbly say that we are probably like a top 5 % company in Europe.

19:40There's a lot of great talent in Europe that is easier to acquire that is in the Bay Area, for example. But I mean, it's not at all cost, right? I think, and as you know, I am critical of Europe. I think we're seeing ultimately what matters is like, are we building great companies? And I think it's very hard to ignore a lot of the success stories we're seeing right now, right? Like there's a lot of great companies being built in Europe. The ecosystem, I think, is coming together. I think, you know, I mean, your rise and the work that you do, I think, is very important. We talked about Matt Miller before really collecting the European ecosystem.

20:14I think there are lots of great things that are happening. And, you know, yeah, I think what is best for Synthesia is to be in Europe today. Nice. That's amazing to hear, right? I think that's counter to the narrative that we often hear. You mentioned some of the issues around Europe, and we saw today EU Wink looks like it's going to go ahead. the president of Europe has mentioned, you know, that she's bullish on it. What would you fix in Europe? If you could wave a magic wand and fix one thing, what would it be? Whether it's late stage capital, capital markets, whatever, what would it be? Yeah.

20:45I mean, ultimately, I think, which is very hard to fix, but I think everything is downstream from culture. Yeah. And I think what we are lacking in Europe is a culture that celebrates ambition, drive, innovation. most of the money in Europe is owned by old families who made their money 100 years ago and I kind of, what was it, like rent-seeking behavior. And I think changing that is very difficult, but I think it is slowly kind of happening a little bit in certain circles, right? And I think that's really important because ultimately the generation that's growing up right now, the new generation of entrepreneurs, the new generation of people that work in companies, like we want those people to to bring that out and be it's okay to be ambitious okay to be driven and you can do it from europe i think that mindset is really important interestingly i also think that a lot of the tension we see in europe now right like five or ten years ago in europe people felt invincible right we have the best countries in the world the best social systems why the heck would we care about innovation about now what we're seeing is Europe is under pressure, you know, like we're under pressure geopolitically from all different angles right now.

21:59And that actually requires us to focus on the things that matters, right? We value independence, we value economical growth, that we're not dependent on our allies to maintain our standards of living. And I think that very naturally, actually means that we kind of focus a bit less on saving the rest of the world and all these things i think it's been a european project for a very long time to actually like we need to put on our own oxygen mask first and then we can we can we can chase some of these other projects that i feel like has been taking way too much air time the last 10 years so i think that is changing then i think on a more practical level i think things like how much pension funds invest in vc funds for example is a very easy fix that we definitely should do i think governments in the eu should just put budget aside to work with european ai companies i think that's that's a very simple again uh thing to do um i think those are probably like the most important ones yeah um i've also talked about like you know the stock market and ipo in europe i think it's still challenged around that maybe that's getting better but um yeah i think i think everything is down to me from culture and that's actually the thing i hope is changing the most and i do think we are moving in the right direction there i think so as well i hear so many more people who now are coming out of university who want to go straight into tech as opposed to banking or lawyer or consulting, which I think is great to see.

23:24And I feel like I meet a lot of people who want to ensure the future of Europe, right? Yeah. Which I think in a way just hasn't like 10 years ago, no one was thinking about the future of Europe, right? Yeah. It's taken for granted, right? Taken for granted. I think now we're seeing, I mean, investing in defense companies five, 10 years ago, right? Absolutely like no VC front would ever do that. But now it's this thing of like, well, it's not like an imaginary threat. It's actually... It's real. It's real, right? So I think as much as I wish that all those duplicating tensions did not exist, I think it does have like a positive effect in some sense.

23:58As a company headquartered here in London, but with so many clients in the US, do the political tensions worry you at all? Not really. I think, you know, business goes on and I don't sense there's any... There's any risk to the business from it? Any risk to the business there. Nice. You talked about capital markets, right? Series E, again, like I said, it's kind of late stage. Are you thinking about an IPO at some point in the next couple of years, five years, 10 years? Yeah. What are your thoughts? Not something we're thinking about right now. Obviously, the stage of the company means that it's something that begins to become a possibility.

24:35But right now, I think we're just very focused on building the best business that we can. And I mean, as we've seen across lots of other companies, there's lots of liquidity in the private markets. and so kind of to some extent begs the question of like why do you want to IPO when you IPO right you're going to be held to a very different set of standards you're going to be evaluated by investors that think very differently than a lot of private investors well so I wouldn't say that's something we you'll be sure not something we're data breaks did their series k I think last year revolute right like 75 80 billion dollars now never and I think there is a very good question to be asked like what is it you gain from going public right um a company like revolut or would probably been hindered in many ways by going public yeah because you you just it's it's harder to make hard decisions right yeah what's the biggest constraint that you're facing currently is it talent distribution or something else i think talent is always like the the hard thing as i've said before i think in europe there's lots of great talent i think in all honesty where it becomes harder is like as a late stage company you begin to need to hire people who've kind of seen software companies high growth operate at scale um with a very kind of high bar for for quality and in europe we just don't have that many companies and thus not that many people so one of the challenges is like finding those executives or leaders and working with them and um you know i think what we have seen is like we've been very fortunate to actually find great people in the u.s who've been willing to move to the to the uk um but obviously the pool there is smaller than if you're in the bay area where everyone is even in i mean the bay area is clearly the best place in the world for for this kind of talent new york is like marginally better than europe um but there is definitely like a gap there but i as i think i think we feel it more in like senior roles yeah i think in in kind of like Like, you know, the majority of the roles that we're hiring for here, I think Europe has great people.

26:42As you grow and expand, you're obviously an AI company selling to enterprises. How are you looking to build a culture, like an AI native culture within Syndita as you grow and scale? So obviously, I mean, we use AI as much as we can. And I think we're in some sense in a great position because we have a workforce of like highly motivated, driven people who are generally pretty young and picks up new tools. very easily. So I love seeing all the ways people are using, I mean, GPTs and AI. Some of the things, you know, we, I don't think I have anything that's like fundamentally new, but things like prototyping with AI, as opposed to, you know, writing long documents, I think clearly is something that's great.

27:26I think it's something we're getting better and better at. In the way we do a lot of our, you know, sales call preparation. There's so many magical things you can do with LLMs there. Understanding, you know, our business and what our customers are doing with the product. There's a lot of like small things. I love seeing when, you know, anyone just comes up with ideas and does it very quickly. Yeah, finds hacky ways of using it. Yeah, exactly. Yeah. When you started, you know, you had strong beliefs about AI and content, which I imagine everybody disagreed with you on, right? It was not, you know, you're very going against the grain, very contrarian in your views around content and AI.

28:05Now those views are becoming mainstream. What views do you hold today about AI and content that you think people still push back on today that you think will be proven right over time? Yeah, it's kind of a weird feeling now that it's actually happening, but also very cool. Is it a relief? Do you get gratification from that of being proved right over time? Yeah, it's definitely like a driving thing for me. It always has been, I think. I always like being contrarian. And being contrarian feels especially nice when you're actually right. Yeah, I bet. So, yes, this was good. I think probably what I feel like is not really mainstream yet, because it hasn't happened yet, is I think a lot of people expect that AI content is going to look like non-AI content, just that the production of it is going to be done with AI, right?