Jan 15 (Reuters) - AI video generation startup Higgsfield raised $80 million in new funding, valuing the company at over $1.3 billion, it told Reuters, as investors rush to develop the sector amid booming demand for the new technology.

The Series A extension round included the participation of Accel, ‌GFT Ventures and Menlo Ventures. The San Francisco-based company said it has reached $200 million in annualized revenue run ​rate, a projection of future revenue.

The deal points to investor interest in AI ‍companies that build applications for specific industries on top ⁠of foundational models. Rather ⁠than competing with OpenAI and Google, Higgsfield integrates third-party models into its platform. 

"We minimize the production tax ‌so that, eventually, better stories and better ​ideas win," Alex Mashrabov, Higgsfield's CEO said in an interview.

A GENERATIVE AI VIDEO BOOM

The race in AI video generation is intensifying, ⁠with well-funded labs focused on building powerful ‍foundation models ​while a growing number of startups, including Runway and Synthesia, target applications for filmmakers, advertisers and enterprise clients.

The interest has also given rise to ‍AI-native social media platforms like OpenAI's Sora.

Higgsfield focuses on post-training models and builds a proprietary so-called "reasoning engine" to chain multiple AI systems together, helping maintain consistency of AI-generated characters and branding in marketing videos, Mashrabov said.

Founded in 2023, Higgsfield launched its browser-based product in March 2025, allowing users to run end-to-end workflows ​within ‍a single system. Social media marketers account for about 85% of the platform's usage. 

Jeff Herbst, managing partner at GFT Ventures and a Higgsfield ​board member, said demand for AI-generated content from social media marketers represents a market potentially larger than Hollywood. Higgsfield's rapid growth was a major reason GFT invested in it, he added.

"They had scaled to around $10 million in ARR from zero in a matter of weeks, and we'd never seen anything like it," he said.

Higgsfield will use the new capital ​to support its push into enterprise sales, an international expansion and further research and development, Mashrabov said. It also plans to grow its workforce from nearly 70 employees to about 300 by the ‍end of the year.