Legally embattled AI music startup Suno raises at $2.45B valuation on $200M revenue

If you want a clear signal of how concerned Silicon Valley investors are about ongoing legal battles tied to AI training on copyrighted works, look no further than Suno, one of the most prominent AI music generators on the market.

Suno — which lets users generate full AI-created songs through simple text prompts — announced on Wednesday that it has raised a $250 million Series C round at a $2.45 billion post-money valuation. The round was led by Menlo Ventures, with participation from Nvidia’s NVentures, Hallwood Media, Lightspeed, and Matrix.

The company offers consumer subscription plans, including a free tier and paid options priced at $8 or $24 per month. In September, it expanded into commercial creator subscriptions. Suno has now reached $200 million in annual revenue, the company told The Wall Street Journal.

This comes after Suno raised a $125 million Series B in May 2024, backed by Lightspeed Venture Partners, Nat Friedman, Daniel Gross, Matrix, and Founder Collective. This round reportedly valued the company at around $500 million.

However, Suno has also become a central player in the legal fight over AI training data. The company is currently facing a lawsuit from three of the world’s largest record labels — Sony Music Entertainment, Universal Music Group, and Warner Music Group — alleging that Suno trained its models on copyrighted material scraped from the internet without authorisation.

These lawsuits fall into a legally uncertain area in the U.S., where most disputes have ended in settlements or licensing agreements for training data. (Just last month, Universal and Udio resolved their own dispute under such terms.) Suno is also dealing with copyright-related challenges brought by Denmark’s Koda and Germany’s GEMA. Notably, GEMA recently won a case in Germany against OpenAI over similar issues.

But despite the legal turbulence, investors remain unfazed, pointing to Suno’s explosive growth and the massive emerging market for AI-generated music.

“Type an idea, click Create, and suddenly you’re not just imagining music — you’re making it. That shift from listener to creator? That’s what Suno unlocks,” Menlo Ventures wrote in its announcement of the investment.

The firm also highlighted that Suno’s growth has been driven mainly by word of mouth, with users sharing AI-generated tracks in group chats and on social platforms.

Legal frameworks for AI-generated content will eventually solidify, but even as those questions linger, one thing is clear: the rise of AI-powered music creation is already well underway.