Crypto startup attempts to cash in on AI hype with bid to raise $7.5 million

Having launched days after AI sensation ChatGPT burst onto the scene, a crypto startup that touts its use of AI is now seeking the backing of professional investors.

ImgnAI, which generates images from text commands, has gone out to venture capitalists seeking to raise $7.5 million at a $50 million equity valuation, according to an excerpt of a message circulated among investors and obtained by The Block. It is also offering backers token warrants at a two-to-one ratio. It is unclear whether any investors have committed to the round. 

ImgnAI declined to comment on deal terms or investor commitments, but said it hopes to raise funds to scale up its team and infrastructure in order to compete with industry leaders.

“While our initial focus is image generation, our goal is to build industry leading consumer tooling across a few distinct product verticals,” said a representative via Telegram. “In addition to the broader retail audience, the potential for AI tooling within web3 is huge.”

Hype cycle

ImgnAI is one of a number of crypto projects whose use of AI has proven a boon in recent months, thanks to an investor frenzy keyed by the overnight success of OpenAI’s ChatGPT.

AI-focused tokens like SingularityDAO (SDAO) and SingularityNET (AGIX) have skyrocketed in price over the past few months. But some have likened them to meme tokens — which tend to follow a rapid boom-and-bust pattern based on their relevance to often fleeting cultural phenomena. Veteran crypto investor Meltem Demirors recently told The Block that such tokens are “way overhyped.” 

ImgnAI’s core product is called Nai, which claims to use AI to generate art based on text commands sent via Discord and Telegram. Samples of that art on ImgnAI’s website include numerous female anime characters, as well as images of Donald Trump and Elon Musk. 

The startup launched its Telegram bot and token on Dec. 9, less than two weeks after ChatGPT debuted. The project's IMGNAI token ballooned in price to around $0.05 in early February, before dropping back to around $0.02, according to CoinGecko data.

“The success of ChatGPT and other platforms is definitely encouraging. However, our goal at imgnAI is always to give users a uniquely fun and enjoyable product experience. We're excited to join a lot of great builders in the consumer AI space and look forward to showing the world what we can do,” said ImgnAI’s representative.