British AI startup Emulate targets $3.7 billion valuation after $700 million funding round

Emulate, a company founded in August by former Google DeepMind researchers, is in talks to raise up to $700 million in a new funding round. According to the Financial Times, this investment could value the startup at $3.7 billion, just one month after its incorporation.

The funding round is led by venture capital firms Index Ventures and Lightspeed Venture Partners, reflecting a trend in the AI industry where investors bet billions on teams that have recently left major labs, often before a commercial product exists, based on the founders’ technical reputation.

Genie and its impact on the gaming industry

Emulate’s three founders—Jack Parker-Holder, Matthew McGill, and Philip Ball—developed Genie, a “world” model created by DeepMind. This technology can generate realistic videos and interactive 3D environments from simple text commands.

Genie’s launch in January sparked a strong market reaction. Video game companies like Take-Two, Roblox, and Unity saw their shares lose billions in market value due to fears that the new technology could automate parts of the game development process.

World models—systems trained to understand and simulate physical space—are now seen as a less competitive research area compared to the race for large language models, a field already dominated by solutions like ChatGPT, Gemini, and Claude.

DeepMind’s internal developments

The announcement of Emulate’s negotiations comes just weeks after Demis Hassabis, DeepMind’s co-founder, stepped down as CEO to become chairman of the company’s board. Hassabis sold DeepMind to Google in 2014 and is considered a key figure in building the London lab’s AI research capabilities.

DeepMind’s third billion-dollar spin-off in 2024

Emulate is the third “neo-lab”—a term used for startups led by former researchers from major AI companies—to emerge from DeepMind’s London offices this year, raising hundreds of millions of dollars.

• David Silver, another former DeepMind employee, raised approximately $1 billion for Ineffable Intelligence, which is valued at $5 billion.
• A team of former DeepMind and OpenAI employees raised over $600 million for Recursive Superintelligence, with a valuation of $4 billion.

This trend isn’t limited to the UK. Last month, Jeff Dean, Google’s chief scientist, announced his departure to found Discovery Loop, a new American startup.

A market in turmoil

Emulate’s case demonstrates how capital is accelerating the transformation of academic research into high-value companies, even when products are still in early development. Investors’ confidence in founders’ technical expertise has fueled a wave of billion-dollar financings across the AI ecosystem.