It was a homegrown success story when Australian AI image generation platform Leonardo.Ai was acquired by fellow Australian software company Canva earlier this year in a deal reportedly worth over $120 million.
Leonardo.Ai co-founder Jachin Basme said that the deal was, in his estimation, “one of the fastest acquisitions ever”, with everything wrapped up in four to five weeks.
“We'd been building our foundational image output model, Phoenix, for a while and we launched it earlier this year, but around the same time, we started thinking about going for our Series B funding,” he said.
“Literally like a week or two after coming out with Phoenix, Cliff [Obrecht, Canva co-founder] called JJ [Fiasson, Leonardo.Ai co-founder and CEO] as Cliff and Danny [Wu, Canva’s head of AI product] were messing around with Phoenix and thought it was really cool.
“We’d had some earlier discussions last year, which was just introductory - we have the same investor, so it made sense to talk to each other - but JJ went and had a chat with Cliff, an offer was made, and we were really considering it.”
At the same time as industry titans like Google, Adobe and Meta were moving into the generative AI space, Leonardo.Ai wanted to focus on building “really cool stuff” – as well as Phoenix, the platform also offers an AI art and AI video generator, alongside tools for marketing, interior design and architecture.
The problem was the time it would take to raise money for such projects was significant, resulting in the startup accepting the offer from the software giant who recently announced they’d hit annualised revenue of A$3.5 billion.
“We thought our vision really aligned with what Canva is trying to do, and at the same time, they didn't just want to swallow us up. They're really keen for us to run independently and focus on the research and building out that capability, as well as maintaining our own platform,” Basme told AdNews.
“It's been a real whirlwind. The last couple years, everything's just been at a pace we couldn't comprehend. [Canva] see a lot of value in the pace we're able to move at, so the whole team is super pumped and we're excited to keep going on this journey.”
That “whirlwind” journey from startup to acquisition began back in early 2022, when generative AI first started gaining traction in both the local and international markets.
As platforms like Midjourney and Stable Diffusion launched, the Leonardo.Ai founders were impressed, but they thought that there had to be a better way than how professionals were using generative AI at the time – “throwing a prompt into a black box and hoping you get back what you want”.
“We set out to build a platform that really brought in as much control as possible with the idea of putting creatives back in the driver's seat,” Basme said.
“We built a platform within a month and launched a minimum viable product on Christmas Eve of 2022.”
As a number of the company’s founders had a gaming background – among others who had machine learning experience – the company leaned into the application of the technology into gaming to begin with, but immediately saw the marketing potential: the idea of training a model on a company's owned assets and brand styling and then outputting consistent images.
“That was the case even what we were pitching to these game studios who would use it for both assets in pre-production as well as for marketing, and as we started to grow and got organic traction, it blew up and we saw it go beyond gaming into advertising, architecture, fashion," Basme said.
He said the team has kept updating Leonardo.Ai’s foundational model over time so that it’s become more prompt-adherent, a change from the early days of the platform where “it would generate really pretty images, but wasn’t necessarily exactly what you asked for”.
Now, Phoenix boasts image outputs that are “high on fidelity”, with the model “faithfully following your prompt, even for long, detailed instructions”, including being capable of rendering coherent text in an image.
That improvement in accuracy has resulted in the platform working with everyone from tier-one advertising agencies in New York, London and Sydney to partnering with fashion, FMCG and automotive brands.
“We worked with Ducati recently which was quite interesting. It was less about the platform itself and more just leveraging the underlying tech through our API," Basme said.
“They built an experience for their consumers to generate their dream bike.
“It was a model trained on a bunch of Ducati bikes and then you could go in and prompt for whatever you like - we saw some crazy stuff like sci-fi bikes on the moon, but it really resembled a Ducati bike and had elements in there that are iconic to their bikes.”
Globally, 22 million users have used Leonardo.Ai so far, generating 5 million assets a day.
While Basme was unable to share Australia-specific stats on user-ship, 719,000 marketers are now leveraging Leonardo.Ai worldwide, with over one billion images, headers and banners having been generated and over 2.7 million videos having been developed for marketers.
As with any image-generation platform in today’s landscape, however, Leonardo.ai has faced accusations that it’s taking away work from graphic designers, creative directors and everyone in between, outsourcing the ideation of content to artificial intelligence and threatening people’s livelihood in the process.
Basme said that while there's “definitely validity” in that argument, he points to how much a technology like Leonardo.Ai can help creatives in terms of productivity and ideation.
“Especially with pre-production in videos/films, the idea of trying to encapsulate your vision by storyboarding and pulling stuff from stock imagery has been how we've done things traditionally, but now you have the ability to visualise what is in your mind,” he told AdNews.
“I don't see how that can be a bad thing.
“Small businesses and small marketing teams are really empowered by technology like this. It's democratising access to this sort of creativity and you can really multiply your output.”
Basme said that the company is also seeing larger companies beginning to realise the power of this technology, and rather than its use resulting in downsizing teams, it’s amplifying everyone's productivity.
“A human still has to be in the loop regardless and there's still an art in producing really good, tasteful content,” he said.
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