[For more diverse corporate information on the startup featured in this article, visit the Unicorn Factory big data platform 'Data Lab'.]
"Cave Duck has a structure that shares revenue with creators, similar to YouTube's model. The key to this business is ultimately how much high-quality content it can secure, and we were impressed by how they solved this through a virtuous cycle. In particular, given that more than half of the users are overseas, we judged that its scalability is even greater."
Park Sung-yong, team leader at ID Ventures, who participated in Warpspace's 4.3 billion won Series A round, explained the investment background as above. Warpspace is a startup established in May 2023 that operates the AI (artificial intelligence) character chat platform 'Cave Duck.' Cave Duck is a platform where users set up images, preferences, and personalities to create their own AI characters, share them with other users, and freely converse.
Users must pay a fee to chat with AI characters, and this cost is shared between Warpspace and the user-creators. Cave Duck, which was simultaneously released on Android and iOS as a mobile app in October 2024, currently has over 1 million cumulative registered users, of whom 67% are overseas registrants. The number of users by country is distributed diversely, with South Korea having the highest share at 33%, followed by the United States at 16%, Japan at 9%, Mexico at 6%, and Taiwan at 5%. Users have directly created and published more than 110,000 characters.
Team leader Park Sung-yong said, "The AI character business is a model growing rapidly in the global market," adding, "We expect it to grow into a comprehensive content platform including short-form videos in the future."
It is analyzed that Cave Duck was able to increase its user base quickly because users directly create their own characters. The various, non-standardized and non-mainstream characters are actually considered a factor contributing to its popularity.
Kim Jin-young, deputy head of Kona Venture Partners, analyzed it as "a kind of subculture fandom phenomenon where people react to niche characters," stating, "It also seems to be an attractive element that users can co-write vast narratives based on the worldviews and settings of the characters they create."
Investors gave high marks particularly for Cave Duck's scalability. Deputy head Kim said, "We see significant expansion potential by linking with existing IP (intellectual property) holders such as novels and comics," adding, "If users can chat with characters that already have fandoms, meaningful demand is expected in the content market." He further added, "The LLM (large language model) costs, which can be considered Cave Duck's cost of goods sold, are also expected to decrease in the medium to long term, making it positive from a profitability perspective as well."
Warpspace plans to actively target the rapidly growing global AI companion market based on this investment. An AI companion refers to a companion-like service that fulfills emotional needs using AI. Market research firm Market.us forecasted that the global AI companion app market size will grow at an annual average rate of 39% from $10.8 billion (approximately 16.3 trillion won) in 2024 to reach $290.8 billion (approximately 439.2 trillion won) by 2034.
CEO Kim Young-bin of Warpspace said, "We plan to use the funds raised this time for R&D (research and development), marketing, and user reward costs," adding, "We will also conduct aggressive marketing centered on overseas markets."
[MoneyToday startup media platform Unicorn Factory]
in FUTURE
