Growing unease about how AI chatbots affect mental health, personal safety, harassment, and misinformation has pushed developers to add safeguards limiting what their models can say or do. Yet these concerns haven't dampened demand. AI holds tremendous promise, and people don't want an impersonal tech company restricting their access to that potential. If they can also keep their privacy while using AI models however they please, why wouldn't they?

Venice AI is capitalizing on this appetite. The company offers access to more than 200 AI models while letting users maintain their privacy. Just two years in, it already attracts over 850,000 unique visitors to its website, serves more than 3 million active users, and handles an average of 1.7 million API calls daily. The startup hosts "uncensored," open-source models on its own data centers and routes queries to closed-source models, such as those from OpenAI or Anthropic. All user input is encrypted and decrypted client-side, then sent through an external proxy before being processed and returned, with no data stored on Venice's own systems. It also provides end-to-end encryption on some models, though that feature requires a paid subscription.

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Unsurprisingly, investors have rushed to get a piece of this momentum. Venice AI announced Wednesday that it raised a $65 million Series A at a $1 billion valuation—its first external fundraising round. The investment was led by crypto-focused venture firm Dragonfly, with participation from Coinbase Ventures, North Island Ventures, and others. The overlap between CEO Erik Voorhees, Venice's privacy focus, and its new crypto backers is hard to miss, especially given his background. An early Bitcoin advocate, Voorhees has founded several crypto companies, including Bitcoin gambling site Satoshi Dice and cryptocurrency exchange ShapeShift, and has long championed user privacy. When a Wall Street Journal investigation accused ShapeShift—which initially didn't require user identification—of processing millions in suspect funds, Voorhees reportedly said: "I don't think people should have their identity recorded to catch an occasional criminal."

He struck a similar tone when asked how Venice AI approaches offering AI models amid recent cases of AI psychosis and resulting harm. He described his team's service as a "neutral tool or a neutral platform." "This is the same principle that you have in Bitcoin, where Bitcoin, as a neutral protocol, works the same way for all people," he said. "I think it's actually quite dangerous from a safety perspective, for the world to enter this next phase and have everyone be constantly watched. To me that is actually much more dangerous than any particular person asking a controversial question or something that might be considered bad."

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There's also a strong emphasis on giving users control. They can freely choose from AI models that generate text, images, audio, and video—each varying in performance, quality, and censorship levels. The website prominently features several AI "characters" that users can customize and chat with, and the company proudly advertises an "uncensored" experience. "We're optimizing for freedom and actually respecting users as adults, which is, I think, rare these days," Voorhees said. The founder noted that Venice works on some open models' system prompts to encourage more open responses, but doesn't add any restrictions to the models themselves.

Not surprisingly, two crypto tokens are tied to the effort. Venice launched a token called "VVV" in early January to attract users, Voorhees said, and added another called "DIEM" in August last year. Users can buy VVV and stake it to mint DIEM, which generates $1 worth of AI credits per day to spend on Venice. However, Voorhees noted that only about 8% of the company's users pay with crypto. He credited the company's growth partly to the strong performance of the crypto tokens, but said the biggest driver was getting close to feature parity with ChatGPT. "When we launched, we were very far away from what ChatGPT could do, but people would use us because it was private. And today, we're very close to what ChatGPT can do [...] so as we've closed that gap, it's become an increasingly compelling alternative," he said.

Looking ahead, Venice AI plans to use the fresh funding to buy GPUs and build its own data centers, moving away from leasing GPUs to boost its gross margins.