Hyper raises $3.6M from Amazon and more for its iPhone-based, VTuber-friendly avatar platform

VTubers — online personalities who use motion-capture-powered manga- and anime-inspired avatars to interact with the world alongside games, over YouTube, and in other places — have become big business, with the most popular of them collectively racking up hundreds of millions of hours of viewership in a month, along with loyal fan bases, lucrative sponsorships and demand for more.

Now, it appears that big tech is starting to take some notice. A startup called Hyper that’s built technology to make the development and use of these avatars into a much easier (and less costly) enterprise has picked up funding from Amazon and other key investors that include some big names in the world of content and avatar creation.

The company is not yet disclosing usage figures, but the backers here speak to some interesting traction. The seed round of $3.6 million is being led by Two Sigma Ventures, with participation also from MakersFund, Twitch owner Amazon’s Alexa Fund, and individuals such as Trevor McFedries, a founder of Brud, Inc. (creator of Lil Miquela); Robin Raskza, the CEO and founder of Facemoji (avatar platform acquired by Google); and Dan Romero (CEO and founder of social media platform Farcaster).

As of 2020, it was estimated that there were around 10,000 VTubers active online. That is just a sliver of the number of gaming streamers active in the market today — 15 million on Twitch with an audience of around 1 billion users annually — let alone the tens of millions of creators running channels on YouTube, Instagram, TikTok and so many other places on the long tail new media horizon.

But Hyper — by replacing a typically fussy set-up of motion capture suits, costly computer and camera equipment and software and bandwidth overhead with a much lighter approach of just an iPhone and an app — believes it can crack open a new seam of demand for making and using VTuber-style avatars on these platforms.

“We want to be the largest avatar company in the world, and we think we could do it,” Aaron Ng, Hyper’s CEO and founder, said in an interview.

San Francisco-based Hyper was incubated at Y Combinator as part of its Winter ’21 cohort, and it is using this latest funding both to continue building out its existing business, as well as to work on new products based around its avatar technology.

First up in that plan will be a move into avatar AI assistants.

Its newest feature is Hyper AI, a tool to create AI-based characters that might look just like Hyper’s other VTuber avatars, but are actually entirely based on AI. They can be used as personal chatbots, or as storytelling characters that appear alongside a VTuber avatar wherever that might be getting used, or simply on their own to propel activity when the human VTuber simply wants to take a break but fans do not.

While avatars used by VTubers are typically powered by their humans, Hyper AI characters are powered by generative AI, built on OpenAI’s GPT and customized by Hyper to respond to natural language questions and other remarks. Ng said that while OpenAI’s APIs were the most readily available and useful, over time the startup would likely work with others, as well.

“We see the creation of multiple large language models as a good thing to tackle storytelling,” Ng said. “They can compete and we will use whatever is best for interaction. We’re not coupled to any of them.”

If VTuber avatars are all about creating narratives for fans, then this is the next logical step in that process, Ng added.

“We see this as a new world of storytelling where people can interact with these characters,” he said. “It is not far off from our original mission.”

That focus on storytelling and providing a new way of building characters for people fits squarely with what Amazon seems to be interested in, and what it wants to invest in, at the moment.

The Alexa Fund was originally conceived of as a vehicle for funding startups within the Echo/Alexa voice AI ecosystem, but Amazon has taken that template and applied it to other areas where Amazon is interested in building out its business. One of the most recent turns has been into the intersection of new media and content, as Alexa Fund’s Paul Bernard explained to TechCrunch earlier this year.

“Synthetic media, virtualization, the metaverse and creator economy stuff. We’re taking on working more with the media part of Amazon, as a new value proposition right now for the portfolio,” he said. “The fit with an Amazon service or experience is typically very forward leaning. We can see these things that are often first of a kind, have never been done before. It’s a strategic fund that at its core places bets on emerging areas of technology that in themselves can have future relevance; in our case mostly for our devices business, or our media business.”

Whether that will mean integrating Hyper’s tools into Twitch, or using its tech to build characters based on content IP that Amazon owns, to use it elsewhere on Amazon’s platforms, or something else entirely, you can see where Hyper might appeal.

One clue into what Amazon might have in mind here might be found in another startup in the Alexa Fund portfolio, the “synthetic influencer” platform Superplastic: The plan there is to build out a wider media empire around some of Superplastic’s characters. That might also be a route that Amazon could pursue with Hyper.

“We are primarily excited to work with Amazon due to the large amount of IP that it has,” Ng said.

Meanwhile, developments like the launch of Apple’s Vision Pro headset are bound to change the goalposts again when it comes to what consumers expect out of digital interaction, opening the door to more possibilities for companies creating digitally native content and the tools to build more of it.

“Hyper Online has the potential to accelerate and expand the content creation landscape,” said Dan Abelon, Partner at Two Sigma Ventures, in a statement. “We know creators are really interested in easy-to-use solutions, and Hyper is dedicated to providing the best mobile tools for this new format.”