After raising $700m, AI21 Labs looks for exit

Israeli artificial intelligence company AI21 Labs, co-founded by Prof. Amnon Shashua, has started to look for a buyer, after raising almost $700 million from investors such as Nvidia, Google, and Intel Capital. As far as is known, the parties negotiating with the company have proposed acquisition deals with various structures, such as acquiring talents and senior managers. From what is known so far, one of the parties negotiating with the company is Nvidia.

AI21 Labs seeks a premium on its price in the private market, over $2 billion, but it is not certain that it will be able to obtain it, seeing that it has not garnered great commercial success. In May 2025, the company held an investment round at a valuation of $1.4 billion.

The company has not responded to approaches from “Globes”, but in an internal email message CEO Ori Goshen has written to the employees: “Some of you may have seen a news item published this morning about a deal between Nvidia and AI21. It’s important for us to make clear: The item was denied both by us and by Nvidia, although the reporter chose to publish it anyway.

“As we have disclosed to you, we are in talks with a number of potential entities, including Nvidia. This is a continuing and discreet process, and it does not indicate a specific deal or any immediate change. The company continues to operate as usual; we are in the final stages of planning the first quarter with the managers of the various units, in the light of our strategic focus. If and when there is something concrete to share with you, you will be the first to know, with full transparency and in an orderly manner.”

A frugal company

AI21 Labs was founded by two computer science professors, Amnon Shashua and Yoav Shoham, together with entrepreneur Ori Goshen. It was a unique company in the Israeli landscape, developing large language models. It began operating before the ChatGPT era, when it launched a program for correcting typos and grammar and improving writing called Wordtune.

AI21 Labs is also an economical company in model development. While OpenAI has raised $63 billion and Anthropic has raised $46 billion, the Israeli company has raised not more than $700 million since it was founded seven years ago. Moreover, even that amount could be smaller, since the company could decide not to draw down all the money it has raised and to return part of it to the investors.

Nevertheless, the larger its models and network grow, the more capital it needs to raise, at a rate of billions of dollars annually, an effort that a company like AI21 Labs is not ready for.

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Accordingly, AI21 Labs did not follow the beaten track. It did not develop a publicly available chatbot such as ChatGPT and Claude, and perhaps paid a price for that on its top line. It has relied all along on the enterprise market, but has never disclosed its revenue, which apparently remains in the tens of millions of dollars.

The company launched language and inference models, but these never enjoyed impressive success, and it later changed its business model to an enterprise program called Maestro that assists IT and AI managers in enterprises to coordinate their work with various language models and AI agents.

This product actually gained higher growth than the company’s other products, the company’s best talents are engaged in developing it, and it could be the thing that attracts a buyer to the company. The company has however increasingly come to understand that it is unable to continue operating independently in an AI industry that is very fast moving and dictates a need to raise billions of dollars every year to buy graphics processors and data center services. It is believed that AI21 Labs has not bought many graphics processors but has mainly used cloud and AI services of some of the major cloud companies.

While AI21 Labs seeks a buyer that will buy it outright for over $2 billion, the companies negotiating with it are sure that they can achieve a much lower price. According to at least two sources, the company was close to the point at which it would have to reconsider its future. Some of the potential buyers are interested in a format similar to the deals between Nvidia and Groq and between Google and Charcater.ai, whereby they will acquire the talents, most or all of the other employees, and licensing of the technology, without buying the intellectual property, in order to avoid a long regulatory approval process.

Published by Globes, Israel business news – en.globes.co.il – on December 30, 2025.

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