Hello, Technical Editor Alexei Oreskovic is guest writing Term Sheet today. Silicon Valley likes to think of itself as the center of the tech world, and San Francisco’s concentration of AI companies makes it even more so.
But as I was reminded recently when I spoke with Joaquín Cuenca Abela, innovation, creativity, and entrepreneurial acumen are not limited by national borders. The 49-year-old Spanish founder shows how it is possible to succeed in the AI market even if your company isn’t building a frontier model, isn’t backed by venture capital funding, and isn’t based in Silicon Valley.
In 2010, a few years after selling his startup to Google, Cuenca co-founded a company called Freepik in Malaga, Pablo Picasso’s birthplace on Spain’s sunny southeast coast. Freepik has carved out a lucrative niche as one of the most popular online platforms for stock images and helped establish Malaga as an emerging technology hub attracting companies such as Google, Oracle and Vodafone.
But when OpenAI’s DALL-E 2 image generator arrived in 2022, Cuenca knew all that was about to change and made a serious switch to generative AI. Freepik has started offering a tool that combines an AI image generation model and editing tools. Last year, he pivoted further, pushing the company into AI video generation.
The business now generates $230 million in annual recurring revenue, with video accounting for about half of the revenue, Cuenca said. luck Exclusively. And given that the company’s business has changed so much since its early days as a stock image platform, the company is changing its name from Freepik to Magnific.
“We are creating a new economy,” says CEO Cuenca. “We’re not acquiring users from any particular competitor. People are starting to realize they can do new things that weren’t possible before.”
Magnific is not trying to compete with major model manufacturers. This allows users to choose from a variety of video AI models, such as Google’s Veo 3.1 and ByteDance’s Seeddance 2.0, and combine it with their own tools. For example, Magnific’s pre-production tools allow users to create assets such as characters, props, and landscape images to create sophisticated AI videos that match the storyline. Magnific’s products have been used in advertising campaigns for Puma and Carl’s Jr, as well as in the Amazon Prime Video series. house of davidby the BBC and others.
Cuenca admits that pivoting from an established business to something new like video AI wasn’t easy. The company now has 400 employees, down from about 550 when it focused on stock images. “Any change is going to come with some pain,” Cuenca said, but said the company is currently hiring employees with a variety of skills and the intention is to eventually be bigger than Freepik was in its heyday. The company opened an office in San Francisco in 2023, currently has about 20 employees, and also has an office in Colombia.
Cuenca said the company has always been bootstrapped, from Freepik to Magnific. He has never raised money from outside investors and says Magnific is profitable.
Will he consider raising capital in the future, especially given that the cost of generating tokens for AI is no small feat? Probably at some point, Cuenca says. But “we’re doing it because we want to grow the company’s DNA.”
see you tomorrow,
Alexei Oreskovitch
×: @lexnfx
Email: alexei.oreskovic@fortune.com
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venture capital
– Coltrion biopharmaceutical (formerly Onco3r Therapeutics), an immunotherapy development company based in Leuven, Belgium, has raised $125 million in Series A funding. sofinova investment, Forbionand Novo Holdings Led the round and was joined by: galapagos, regeneron Ventures,others.
– liquid musical instrumentThe San Diego-based company, which develops test and measurement equipment for the manufacturing, defense and education industries, has raised $50 million in Series C funding. keysight technology and Australian Government National Recovery Fund Corporation led the round.
– square minda Paris, France-based AI and robotics company focused on dermatology, has raised $18 million in funding. sonder capital Lead the round and be joined by: Deep Tech 2030 Fund, Adamed technology, Calm/Storm Ventures, team pact Ventures,others.
– PatronusThe Berlin, Germany-based developer of smartwatches and family apps designed for senior safety has raised €11 million ($12.9 million) in growth capital. 3TS Capital Partners Lead the round and be joined by: grazia stocks, singular, Burda Principal Investments, adjacent, napand UVC partner.
– clara sitea New York City-based AI operating system that manages business travel and expenses, has raised $11.5 million in Series A funding. Ally Coop Lead the round and be joined by: Rack House Venture Capital, clock tower Ventures, pulse fund, Thayer Ventures, future return Ventures, Vestigo Venturesand XYZ venture capital.
– Seguraa São Paulo-based developer of AI infrastructure for insurance distribution, has raised $8 million in seed funding. a16z and Kashek Led the round and was joined by: big bet.
– Aira healtha Boston-based developer of decision-making infrastructure for advanced clinical development, has raised $2 million in pre-seed funding from: interaction venture partner and Nesprit.
private equity
– Astorg agreed to acquire the microbiology business from thermo fisher scientificis a Waltham, Massachusetts-based medical device manufacturer that was acquired for approximately $1.08 billion. Financial terms were not disclosed.
– B.S.N. sportsDepartment of national team brandwas supported by KKRobtained sports effortthe Hillsboro, North Carolina-based soccer club’s uniforms, equipment, e-commerce platform, and Lax.comis a lacrosse-focused e-commerce platform based in Norwalk, CT. Financial terms were not disclosed.
– Protossis a portfolio company. southfield capitalobtained at risk internationalis a Washington, DC-based provider of executive and general protection services, intelligence, and risk consulting services. Financial terms were not disclosed.
Exit
– bridge point group agreed to acquire a majority stake in iC consultis an identity security services company based in Munich, Germany. carlyle. Financial terms were not disclosed.
– stone peak and Bernhard Capital Partners agreed to the acquisition Cleco groupa power company based in Pineville, Louisiana; Macquarie Asset Management, British Columbia Investment Management Corporationand Manulife Investment Management. Financial terms were not disclosed.
– sullivan street partners obtained Mi huba corporate uniform company based in Derby, UK. LDC. Financial terms were not disclosed.
– of sterling group obtained Scruggsis a Houston-based water and wastewater valve automation company. Rocks Capital Partners. Financial terms were not disclosed.
– viva gymis a portfolio company. providence capital partneragreed to obtain synergistic effecta gym chain based in Malaga, Spain. All Seas Capital. Financial terms were not disclosed.
IPO
– hawkeye 360The Herndon, Virginia-based space-enabled defense technology developer plans to raise up to $416 million by offering 16 million shares at prices between $24 and $26 on the New York Stock Exchange. The company had sales of $118 million in the year ended December 31. Insight Partners, night dragon, GICand Razor’s Edge Ventures I’m going back to work.
– Suja Lifean Oceanside, Calif.-based juice company, plans to raise up to $213.6 million in an offering of 8.9 million shares priced between $21 and $24 on the Nasdaq. The company had sales of $327 million for the year ended December 31. Payne Schwartz food chain fund, meaningful partner, New Vive partnershipand Management HoldCO I’m going back to work.
– Seaport TherapeuticsThe Boston-based company, which develops treatments for neuropsychiatric disorders, plans to raise $212.4 million by offering 11.8 million shares priced between $16 and $18 on the Nasdaq. pure tech health, ARCH Venture Partners, common atlantic ocean, sofinova venture partnerand third rock Ventures I’m going back to work.
– Hemab Therapeuticsa Cambridge, Mass.-based developer of treatments designed for blood clotting disorders, plans to raise up to $212.4 million by offering 11.8 million shares priced between $16 and $18 on the Nasdaq market. RA Capital Holdings, Novo Holdings, Len Blavatnik, sofinova partner, deep track capital, Small Cap Global Fund, health cap investmentand Avolo Ventures return to work.
Fund + Fund of Funds
– emerald lake capital managementA Los Angeles-based private equity firm has raised $800 million for a new fund focused on North American industrial and service companies.
people
– Maple Park CapitalHired by investment firm based in Dallas and New York City robert Zell As CFO. Previously, he served as COO and CCO. Alta fox capital management.
