AI Business36氪

The AI Unicorn Once Valued at $5 Billion, Why Is It Being Sold for Less Than 10% of That?

36氪Oct 14, 20261 min read

AI Summary

On October 12, Character.AI, once a leading AI companionship startup, filed for Chapter 11 bankruptcy in a Delaware court and began a court-supervised asset auction. Disney has agreed to a stalking horse bid of $20 million for a non-exclusive perpetual license to part of the intellectual property and transitional technical services. If no buyer takes over the platform, it may shut down.

AI Insights

Character.AI's bankruptcy auction, with Disney as stalking horse bidder at $20M for non-exclusive IP licenses and transitional services rather than the company itself, shows that a $5 billion peak valuation can collapse once the core talent is absorbed by a big-tech acquihire and the business relies on free users with little monetization. The deal also illustrates how rights holders are shifting from blocking AI character use to acquiring the technology that enables licensed interaction, which signals a new route for IP-driven generative AI consumer products.

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Translated text

Character.AI was founded in 2021 by Noam Shazeer and Daniel De Freitas, core authors of the Transformer paper. In March 2023, a16z led a $150 million Series A at a $1 billion valuation, and in September 2023 reports of a fundraise above $5 billion surfaced but did not close. In August 2024, Google paid roughly $2.7 billion for a technology license and rehired the founders and about 30 researchers into DeepMind, after which the company effectively became a product company. Monthly active users fell from a peak of about 28 million in mid-2024 to around 20 million, and in 2025 the company began showing ads to free users. Revenue is estimated at about $15.2 million in 2023, $32.2 million in 2024, and $50 million in 2025, roughly $2.5 per user per year. After a 14-year-old's suicide in February 2024 led to a lawsuit, and after Disney sent an infringement letter that forced removal of many Disney characters, Disney is now acquiring part of the company's technology assets. The bankruptcy illustrates the cost, copyright, and monetization problems facing consumer generative AI apps.

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